Contents

Task 2: Prepare a report to identify and evaluate the sources of finance available to DRC ........... 2

2. Cost of finance sources ........................................................................................................... 3

3. Implication in terms of legal and financial aspects in issuing debt and equity to raise funds 3

Task 3: Explain the impact of finance on the financial statements................................................. 5

 The impact of finance in the financial statements of DRC .................................................. 6

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Task 2: Prepare a report to identify and evaluate the
sources of finance available to DRC

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2. Cost of finance sources
For a company that needs capital to grow, they should use both sources of finance, because each
source has its own advantages and disadvantages. Depending on the need for funds, they may
choose to borrow money from the bank or issue shares. If the company is in need of money to
carry out a project, they can borrow money from the bank. If the company does not have the urgent
need for money but just needs more money to develop the company in the long run, they can issue
stock. The choice of which method to get funds depends on the company's current activities and
goals.

3. Implication in terms of legal and financial aspects in issuing debt and equity to raise funds
Purpose of issuing bonds and shares:

1. Implementation of investment programs and projects of enterprises.

2. Increase the size of business capital.

3. Restructure the debts of the business.

Not all companies can issue their shares or bonds on the stock exchange. To be able to issue shares
on the stock exchange, companies must meet all government standards and regulations.

Principle of bond issuance:

1. The list of bonds shall be issued on the principle of self-borrowing, self-repayment and self-
responsibility for the efficiency of the use of capital.

2. Bond issuance activities must be transparent, fair and protect the legitimate rights and interests
of investors.

3. The issuance of bonds for debt restructuring must ensure the principle of not issuing bonds on
the international market to restructure debts in VND.

4. For the issue of bonds for investment in programs and projects, the issuing enterprises shall have
to maintain a minimum capital percentage of twenty (20%) of the total investment capital. Of the
program or project.

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5. In cases where an enterprise issues bonds on the international market, in addition to complying
with the provisions of this Decree, the provisions of law on borrowing and repayment of foreign
loans must also be complied with.

(Source: Nghị định về phát hành trái phiếu doanh nghiệp, 2011)

Terms and procedures to issue shares for the first time:

If a company wants to issue shares for the first time, they will have to have a charter capital of
ten billion VND. Profitable business activities in the last two consecutive years, up to the date of
submission of the application file for issuance, they must have a healthy financial status,
prospects for development (VnExpress, 2001).

Under the conditions mentioned above, DRC is fully capable of issuing shares to the market. At
present, they have a capital of more than one trillion VND and have had a very positive financial
situation in the past two years.

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Task 3: Explain the impact of finance on the financial
statements

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  The impact of finance in the financial statements of DRC
It a financial statement that means finance is the main reason for whom we are going to make
statement. So, the impact is surely very much. There are many types of finance, and each has
implications for financial statements: sales, shares, expenses, costs, borrowings, owner's equity,
etc. But in general, it increases the assets if it is inflow and vice versa.

Businesses regularly put out financial statements such as the income statement, balance sheet and
statement of cash flows. When these financial statements are released, they can have large impacts
on the business and on the investors of the company. Therefore, it is critical for the business to
ensure that the information the statements present is correct.

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Bibliography
Nghị định về phát hành trái phiếu doanh nghiệp. (2011). Retrieved from Hệ thống văn bản quy
phạm pháp luật:
http://www.moj.gov.vn/vbpq/lists/vn%20bn%20php%20lut/view_detail.aspx?itemid=270
64

VnExpress. (2001). Điều kiện và thủ tục để phát hành cổ phiếu lần đầu. Retrieved from
VnExpress: http://kinhdoanh.vnexpress.net/tin-tuc/chung-khoan/dieu-kien-va-thu-tuc-de-
phat-hanh-co-phieu-lan-dau-2666781.html

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