The entity has several high-cost.non-profitgenerating assets. It also has:avcost of debt and equity significantly higher than the industry average. In creating and executing a financial policy, the financial manager may do the following EXCEPT: a. Suggest a cost-benefit analysis using capital budgeting techniques on the non-profit-generating assets. b. Request for a more conservative investing and financing policy. c. Determine the cause of the high cost of financing. d. Determine whether these non-profit-generating assets be sold and be used to purchase other non-operating assets that can provide a return higher than the cost to finance these.
Cost of Debt, Cost of Preferred Stock
This article deals with the estimation of the value of capital and its components. we'll find out how to estimate the value of debt, the value of preferred shares , and therefore the cost of common shares . we will also determine the way to compute the load of every cost of the capital component then they're going to estimate the general cost of capital. The cost of capital refers to the return rate that an organization gives to its investors. If an organization doesn’t provide enough return, economic process will decrease the costs of their stock and bonds to revive the balance. A firm’s long-run and short-run financial decisions are linked to every other by the assistance of the firm’s cost of capital.
Cost of Common Stock
Common stock is a type of security/instrument issued to Equity shareholders of the Company. These are commonly known as equity shares in India. It is also called ‘Common equity
The entity has several high-cost.non-profitgenerating assets. It also has:avcost of debt and equity significantly higher than the industry average. In creating and executing a financial policy, the
a. Suggest a cost-benefit analysis using capital budgeting techniques on the non-profit-generating assets.
b. Request for a more conservative investing and financing policy.
c. Determine the cause of the high cost of financing.
d. Determine whether these non-profit-generating assets be sold and be used to purchase other non-operating assets that can provide a return higher than the cost to finance these.
Role of a financial manager:
The role of a financial manager is to create and execute a financial policy that will result in weeding out unwanted expenses and taking relevant decisions to place a firm on a financially strong footing so that it is ready to take advantage of favourable opportunities that come its way.
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