Jyothi Chandra is a financial consultant whose specialises in the problems of small and medium size enterprises. Recently she was called into advice the management of asmall corporation that produces natural food product to be distributed through supermarkets. Demand for the firm's product has been increasing rapidly. To keep us with this demand the firm must either rent or buy a larger plant and more equipment. This will also mean increased inventories of raw materials, good in process and finished inventory. The managers are concerned about how to finance the cost of expansion. What are the options? Should the managers seek out long or short term financing? Would this be different if this were a private limited company? Answer the question in about 200 words.
Hey Ameen,
The managers should seek long term financing as the financial requirements for fixed assets, such as, plant and equipment exceeds 5 years. The following are the long term sources of finance.
https://www.meritnation.com/cbse/class11-commerce/revision-notes/business-studies/business-studies/sources-of-business-finance/1161_5371
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The managers should seek long term financing as the financial requirements for fixed assets, such as, plant and equipment exceeds 5 years. The following are the long term sources of finance.
- Equity shares
- Retained earnings
- Preference shares
- Debentures
- Loan from financial institutions
- Loan from banks
- Loan from financial institutions
- Loan from banks
https://www.meritnation.com/cbse/class11-commerce/revision-notes/business-studies/business-studies/sources-of-business-finance/1161_5371
Keep Posting!!