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Financial Management Principles And Applications - Essay Example

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Beta’s acquisition of equipment for its operations can be financed by short-term loans, long-term liabilities, or shareholders’ equity. The paper "Financial Management Principles And Applications" discusses how Beta is tied to paying up these loans within the year…
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Financial Management Principles And Applications
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"Financial Management Principles And Applications"

Download file to see previous pages Long-term liability requires the payment of interest in pre-agreed periods which requires Beta to have enough liquidity to cover immediate payment of interest when it becomes due. Capital from shareholders can also be considered. This is advantageous since Beta will not be required to pay any dividends. However, issuing new shares require the company to undergo certain processes which can delay acquisition.
After analyzing the advantages and disadvantages of utilizing different financing schemes, it is recommended that Beta raises fund through long-term debt. This is in consideration of the above discussion in addition to the fact that it already has a quite high level of funds from shareholders.
b. An organization's trading profit and loss account showing the revenues or funds generated the entity compared to the costs and expenses incurred in its operation. In most companies, it starts with the revenue generated where the expenses are subtracted. The last line shows its net profit for the fiscal period or for listed ones, the return to its stockholders. This financial statement is often the most popular one as it is used by creditors, stockholders, and even ordinary consumers. Entities considering to provide financing for the company also often gauged profitability and ability to pay based on profit and loss account.
The balance sheet shows an entity's resources and how they are financed. The organization's assets and liabilities are often listed based on their liquidity, that is, on their capacity to be converted to cash easily. Balance sheets are often scrutinized by creditors and stockholders, the major sources of financing for the company. Balance sheets provide information about the company's level of leverage which informs stockholders and creditors about their share in the company's resources and the riskiness of investing in the company. ...Download file to see next pagesRead More
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