Imagine you are a business owner; discuss debt financing, types of risk, beta, and investments - Assignment Example

This would give you a better idea to stock only as much as you would need. For a small business the ratios can do wonders as it utilizes current cash flows to determine how much cash would be flowing in the future. Most importantly for a small business like mine the financial ratios help to identify the weaknesses and the strengths of the business. This way the retailer can have a better understanding on how to play his cards in order to make his business flourish. A few ratios that tend to be important to a small business would be income ratios, liquidity ratios, and profitability ratios.

Though what seems important for a small business enterprise will not be as important for a larger business enterprise. Thus larger business corporations have to consider retailers and wholesalers, for them it’s the ratio is of total assets and total liabilities. They have manufactures and a number of other liabilities and ratios that need to be accounted for while the workings of a small business are fairly simple. Another important factor in managing small businesses that is debt financing.

Most small businesses do not require large investments and so they use debt financing. Debt financing is all about taking a loan from the bank to finance the newly found business practice. Debt financing surely has its upsides and downsides. We shall discuss the upside first; debt financing allows you to have full control over your business practices unlike having a partner. Another one would be the tax benefits involved (Bragg, 2011). Another important factor would be that the amount due is fixed and so can be managed over the months’ time because it is easier to generate the amount with a target in mind.

Last but not least no amount of profit generated is up for sharing. Where theres an upside theyre bound to be a downside as well. The debt financing brings along with the