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For working capital, it is preferable to finance them from permanent capital or short-term liabilities.
Fixed assets, preferring to finance them from long-term equity or liabilities because fixed assets require large sums to finance them, and financing the same company in fixed assets may expose them to a subsequent financial crisis.
In all condition difficulty or not, the balance is required if i have sufficient cash i have to read my needs as a company, the key is the cost of the cash that i have to keep or use.
Am i have to use my cash for working capital needs?
or use bank draft?
what is impact for both? that i have to measure, or may i can use both draft and own cash (For working capital). what is the opportunity cost in all these scenarios.
Am i have plan for expansion? use reteined erning, capital (issue Stock), Banks, Bonds,
also expansion (Capital expenditure) if that expansion out side the country for example in high risk areas like Africa , then better to finance the project from the banks even if i have enough cash in order to make balance of risk in case of politic issues or change in regulations as expected normally.
in that case force majeure could be apply on behalf of company against the banks or the insurance company if the project put hold.
the main things is additional to the profit and loss insight i have to cover the risk of not having or shortage in liquidity.
Thanks for invitation,
Agree with the answer of mR. Ali Hassan
The Correct and Best Answer added by: Ali Hassan Mohammed Saleh Chief Department Costs 10 days ago
