1) Describe the various sources of finance a company can use in meeting their long-term and short-term financial needs?
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Q: B. Discuss the potential sources of long-term finance available to a large company.
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1) Describe the various sources of finance a company can use in meeting their long-term and short-term financial needs?
2) A balanced capital structure is important for the overall health of the company. explain how an ideal capital structure should help the company for the success of its business?
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- “Efficient working Capital management leads to improve the operating performance of the business concern and it helps to meet the short-term liquidity” Do you agree with the above statement? Explain. What are the types of working capital policies? Explain and compare of working capital financing policies in criteria of (1) Approach (2) Risk level (3) Profitability (4) Interest costs, and (5) Liquidity management.To measure the financial viability of a proposed business, which is the more powerful measure- profitability, liquidity, solvency or payback period? Support your answer with clear examples.What comment can be made on this or what can be added? The Weighted Average Cost of Capital (WACC) is a financial analytical tool that is essentially a calculation utilizing a company's market value of equity, debt, and tax rate. This allows both the company and investors an estimated net value of the company and can give indications of the value of the company moving forward. The WACC is especially important for a company to understand because the WACC is a good indication of the success or failure of a company's current investment strategy and if favorable, can assist a company when it comes to purchases of sales or other acquisitions
- what comment can be made on this or what can be added to it? The weighted average cost of capital is a calculation that can be done by a business to determine how much it will cost to borrow money to generate capital (WACC, n.d.). The result of this calculation will help business determine if financing a project is an investment that will yield positive returns (WACC, n.d.). The WACC takes into account the cost of equity and the cost of debt to figure out whether an investment is worth taking on (WACC, n.d.).Below you have the three types of financial management decisions. Match each type of decision to a business transaction that would be relevant. Capital budgeting A. Deciding whether to issue new equity and use the proceeds to retire outstanding debt Capital structure B. Deciding whether to expand a manufacturing plant Working capital management C. Modifying the firm's credit collection policy with its customersWhat factors contribute to the business risk of a company? What is financial risk? How do the various sources of risk affect the optimal capital structure?
- Identify the concept of an optimal capital structure for a business firm.2. I) Identify the concept of an optimal capital structure for a business firm. II) Analyse TWO (2) issues that manager would be facing when they consider changing a business firm’s capital structure.Solvency is a firm’s ability to survive in the long term by paying its long-term obligations. Its key ingredients are capital structure and earning power. Discuss what solvency is and how it relates to capital structure.
- Which of the following statements is true? a. Determining how day-to-day financial matters should be managed is not a function of financial managers. B. The goal of the firm is to maximize market share. C. Working capital management refers to identifying productive long-term assets the firm could acquire to maximize net benefits. D. Capital budgeting refers to identifying productive long-term assets the firm could acquire to maximize net benefits.Q.2. Why capital budgeting decision is important for a financial manager while taking on long term investment decision? How capital budgeting decision is linked with wealth maximization goal of the firm? Financial management questionSelect all that is true about the role of financial managers and the types of financial decisions they make. Select one or more: a. Capital structure describes the mix of short-term liabilities a firm uses to finance its short-term assets. b. The optimal financial management strategy of a financial manager is to reduce the overall risk level of the firm. c. The duties of the financial manager includes determining the capital structure and which projects the firm should undertake. Od. Size and timing of cash flows is unimportant in a capital budgeting decision. e. Capital Budgeting function involves planning and determining the firm's short term investments. Of. Determining the appropriate level of inventory is a working capital management function. ZA do W X L