The Financial Budgeting - Essay Example

There are various different options available to raise funds for investments. The analyses of the various sources are referred to as the Alternative Capital Analysis. There are a number of different factors to be considered while making a decision about the sources of funds and this plays a very important role in the decision making. This method of analysis focuses on the risks that are associated with the various sources (Weston and Copeland, 1988). However there are also a number of other factors that need to be considered for the analysis as well.

These are generally non financial and include ownership of the company, voting rights, decision making and many more. Here in the case of Cactus Health Inc., it is essential that the capital scenario is well evaluated and all risks considered. This is mainly due to the lack of clear risk management and the lack of expenditure guidelines. Hence the best option for Cactus is one which is low risk (Stoltz and Viljoen, 2007). The most potential capital sources for Cactus Health Inc are equity shares and Debentures.

Since the operations are diversified and there are a number of opportunities for development the most effective mode of raising additional capital is via initial public offering and also entering into the stock markets. Equity Shares: Equity Shares is a share of the company’s assets and a share of earnings after the claims are met. These shareholders are owners of the business and have a right on the company for the percentage of the share owned by them. They are also responsible for the risk borne by the company as well (http://financial-dictionary.

thefreedictionary.com/Equity+securities). Cactus health has the option to provide for equity shares, either by selling more of the existing shares or can issue new shares in order to raise some surplus finance for