Business Financing

Jun 27th, 2015
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Abraham Lincoln University
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To achieve this, small businessmen must not only have an understanding of how to reach the sources of finance available to them, but must also know how to capitalize on the use of these sources in order to reduce the risk factor. This Problem Solver will give you some reasonable pointers in this regard. Fundamental to the approach will be the fact that the development of small businesses should be based on sound business principles and disciplines, thereby assisting in the efficiency and prof

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Financing Financial Resources and DecisionsA financial resource is what a business uses to acquire and place all the other resources in place in order to generate wealth for the business. There are three types of financial resources that each business requires. The first one is the fixed capital financing and involves the acquisition of fixed resources such as plant and equipment, computers, and land and building. Resources invested in the acquisition of these fixed assets are frozen because the funds cannot be utilized in any other way. A lot of funds are required to fund the acquisition of these assets and repayments of the resources consumed take a long period of time. However, it is expected that the fixed assets will increase efficiency in the operation of the firm and consequently increase the profitability (Zhu, Wuxiang and Zhengwei, 328). The increased revenue will place an organization in a position where the necessary repayments can be made on time. Working capital is another form of financing that is required by business and it is used to fund the short term liabilities such as the paying of salaries and wages, bill settlement, stocking of the inventory and the accommodation of credit sales. It is important to maintain certain levels of working capital in order to caution the firm cash flow differentials. These differentials are brought about by fluctuations in sales, unexpected changes in demand of a firms product and occurrence of an unpredicted event. Jus

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