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0.4/ABC Ltd. is not having good liquidity position. It has invested in long term investment Pojects and will get smooth cash flow after five years. It is not in a position to bear then fixed burden of paying interest.
mpan or thi
(a) Suggest which source of finance is suitable for this company. (b) Suggest other risk factors that are to be kept in mind.?
mpan or thi
(a) Suggest which source of finance is suitable for this company. (b) Suggest other risk factors that are to be kept in mind.?
Most Upvoted Answer
0.4/ABC Ltd. is not having good liquidity position. It has invested in...
Suitable Source of Finance
To address the liquidity challenges faced by 0.4/ABC Ltd., the following sources of finance are recommended:
- Equity Financing:
- By issuing new shares, the company can raise capital without the obligation to pay fixed interest.
- Convertible Debentures:
- These can be issued to attract investors who might want the option to convert their debentures into equity in the future, thus reducing immediate cash outflow.
- Venture Capital:
- Engaging venture capitalists can provide the necessary funds along with business expertise, without the pressure of fixed interest payments.
- Government Grants and Subsidies:
- Exploring grants for long-term projects can alleviate some financial burdens, as these do not require repayment.
Other Risk Factors to Consider
When investing in long-term projects and managing liquidity, 0.4/ABC Ltd. should keep the following risk factors in mind:
- Market Risk:
- Changes in market conditions can affect cash flows from long-term investments, leading to potential losses.
- Operational Risk:
- Inefficiencies in project execution can delay cash inflows, impacting liquidity.
- Interest Rate Risk:
- If the company opts for any form of debt, fluctuations in interest rates can increase borrowing costs.
- Regulatory Risk:
- Changes in regulations could impact project viability and profitability, making it essential to stay updated on policy changes.
- Credit Risk:
- If the company is relying on receivables for cash flow, the risk of customer defaults must be considered.
By strategically choosing financing sources and being aware of the associated risks, 0.4/ABC Ltd. can improve its liquidity position while navigating potential challenges.
To address the liquidity challenges faced by 0.4/ABC Ltd., the following sources of finance are recommended:
- Equity Financing:
- By issuing new shares, the company can raise capital without the obligation to pay fixed interest.
- Convertible Debentures:
- These can be issued to attract investors who might want the option to convert their debentures into equity in the future, thus reducing immediate cash outflow.
- Venture Capital:
- Engaging venture capitalists can provide the necessary funds along with business expertise, without the pressure of fixed interest payments.
- Government Grants and Subsidies:
- Exploring grants for long-term projects can alleviate some financial burdens, as these do not require repayment.
Other Risk Factors to Consider
When investing in long-term projects and managing liquidity, 0.4/ABC Ltd. should keep the following risk factors in mind:
- Market Risk:
- Changes in market conditions can affect cash flows from long-term investments, leading to potential losses.
- Operational Risk:
- Inefficiencies in project execution can delay cash inflows, impacting liquidity.
- Interest Rate Risk:
- If the company opts for any form of debt, fluctuations in interest rates can increase borrowing costs.
- Regulatory Risk:
- Changes in regulations could impact project viability and profitability, making it essential to stay updated on policy changes.
- Credit Risk:
- If the company is relying on receivables for cash flow, the risk of customer defaults must be considered.
By strategically choosing financing sources and being aware of the associated risks, 0.4/ABC Ltd. can improve its liquidity position while navigating potential challenges.
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0.4/ABC Ltd. is not having good liquidity position. It has invested in long term investment Pojects and will get smooth cash flow after five years. It is not in a position to bear then fixed burden of paying interest.mpan or thi(a) Suggest which source of finance is suitable for this company. (b) Suggest other risk factors that are to be kept in mind.?
Question Description
0.4/ABC Ltd. is not having good liquidity position. It has invested in long term investment Pojects and will get smooth cash flow after five years. It is not in a position to bear then fixed burden of paying interest.mpan or thi(a) Suggest which source of finance is suitable for this company. (b) Suggest other risk factors that are to be kept in mind.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about 0.4/ABC Ltd. is not having good liquidity position. It has invested in long term investment Pojects and will get smooth cash flow after five years. It is not in a position to bear then fixed burden of paying interest.mpan or thi(a) Suggest which source of finance is suitable for this company. (b) Suggest other risk factors that are to be kept in mind.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for 0.4/ABC Ltd. is not having good liquidity position. It has invested in long term investment Pojects and will get smooth cash flow after five years. It is not in a position to bear then fixed burden of paying interest.mpan or thi(a) Suggest which source of finance is suitable for this company. (b) Suggest other risk factors that are to be kept in mind.?.
0.4/ABC Ltd. is not having good liquidity position. It has invested in long term investment Pojects and will get smooth cash flow after five years. It is not in a position to bear then fixed burden of paying interest.mpan or thi(a) Suggest which source of finance is suitable for this company. (b) Suggest other risk factors that are to be kept in mind.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about 0.4/ABC Ltd. is not having good liquidity position. It has invested in long term investment Pojects and will get smooth cash flow after five years. It is not in a position to bear then fixed burden of paying interest.mpan or thi(a) Suggest which source of finance is suitable for this company. (b) Suggest other risk factors that are to be kept in mind.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for 0.4/ABC Ltd. is not having good liquidity position. It has invested in long term investment Pojects and will get smooth cash flow after five years. It is not in a position to bear then fixed burden of paying interest.mpan or thi(a) Suggest which source of finance is suitable for this company. (b) Suggest other risk factors that are to be kept in mind.?.
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