Managing Financial Resoures and Decisions 4. Answer 13 questions.No Assignment

Managing Financial Resoures and Decisions 4. Answer 13 questions.No more than 2500 words allowed - Assignment Example number Equity is a nonher smart option that can be used by the play along. This involves issuing sh bes to investors at a price determined by the gild and using them to bring forward finance for the equipment needed by the scientistsLease is when the other company or financing organization buys the equipment and let our company use it against monthly charges known as rentals. The benefit of this option is that the company impart not have to bear the entire cost of equipment upfront and in case the company does not need equipment in the future it wont have to pay the rental and will not have to invest huge sum of money into buying the product. Hire-Purchase is like a loan to the company. The difference here is that instead of lending you the money, the bank or other financial institution buys you an plus and charges a mark-up against this assets which is amortize d by the monthly payments which includes payment of both principal and the mark-up. ... vidends are only paid in the profitable years, whereas in case of loans, remove and apply purchase interest has to be paid every period regardless of the fact the company makes a profit or loss. Hence obtaining credit loans, lease and hire purchase is burden on the companys resources as creditors have a right to sell of companys assets if they are not paid. Keeping in mind the company is young and does not have enough resources or plowed back profits, it is the best option for the company to raise finance by issuing equity. However, the company should make sure that it floats as much shares in the market so as they will not relapse the control of the business or not third party investors will be able to collude to form a holding company. 1c) There will be a different set of requirements and documents that different funds providers will ask from the company before expending them a loan. Banks w ould ask for collateral and a business plan before deciding on whether it would lend the company or not. Bank would also ask for projected cash flows and income statement in order to make sure that the funds that the bank is obtaining are yielding the required return in order to pay the bank. Similarly, a bank would also ask for the balance sheet to make sure that in the event of default, the company has enough assets and the bank could sell them to recover its lending. Equity investors would want a prospectus which will have to be published in the newspaper. Other than equity investors would be interested in knowing the future plans of the company, the growth ordinate and name of directors and people running the company. Leasing company would need to know how long the company intends to use the assets, what will be the cash flow generation of the assets and what are the resources