Managerial Financial Resources and Decisions Research Paper

Managerial Financial Resources and Decisions - Research Paper Example Certain debt agreements impose business restrictions. These restrictions may impair the firm's borrowing abilities C) Appropriate sources Though Wal- Mart Stroes Inc. is properly appropriately financed at present financed with as most of its finance has come through equity contributions. It is low geared company as its debt equity ratio is 0.60. That company may not be playing on gearing but the equity holders are in control with the affairs of the company. Further financing can be raised though debts in case the company intend to take advantage of the gearing. However, at present the company is appropriately financed. Question No. 2 a) Cost of different sources of funds; Costs of Public Issue Costs of Public issue depend upon the size of issue and the level of marketing adopted. The important expenses normally incurred for a public issue are as under: Underwriting expense, Brokerage, Fee to the mangers to the issues, Fee to the Registrars to the issue, Printing Expenses, Courier and Postage expenses, Advertising and Publicity Expenses, Listing fee, and Stamp duty. Public offer of debt The mechanisms for a public offer of a debt security are much the same as that of a public offer of equity. But a debt issue cannot be made unless credit rating from a credit rating agency is obtained and disclosed in the offer document. So rating agency's cost is in addition to cost of public issue Obtaining term loan This is perhaps the cheapest source o obtaining long term finance, as generally the dealings between company and the financial institution providing the loan do not invite costs of the type involved in public issues. However, the company has to pay for professional for obtaining feasibility and other reports. b) Importance of... The mechanisms for a public offer of a debt security are much the same as that of a public offer of equity. But a debt issue cannot be made unless credit rating from a credit rating agency is obtained and disclosed in the offer document. So rating agency's cost is in addition to cost of public issue This is perhaps the cheapest source o obtaining long term finance, as generally the dealings between company and the financial institution providing the loan do not invite costs of the type involved in public issues. However, the company has to pay for professional for obtaining feasibility and other reports. Financial planning is part of a larger planning system in the firm. The planning process begins with a statement of the firm's goal or mission, which is usually stated in qualitative terms. From the mission of the firm, the strategy is derived which defines the products or services the firm will produce and markets it will serve. To support the strategy, policies and budgets are developed in various areas such as research and development, production, marketing, personnel, and finance. A financial planning represents a blue print of what a firm purposes to do in future. Financial planning have generally the following elements: 3.