Business Financing and the Capital Structure

Business Financing and the Capital Structure

Discussion

The process of financial planning involves the Projection of financial statements in which the company's loss and profit would be accounted. There are two sheets of statements which can be made for a certain time period that will help the financial advisor in determining the amount of fund requirement. Working capital management is a tool to measure the efficiency of company and its short term financial health issues. The current assets of company should not exceed to its current liabilities as the company might go into problem in paying back the credit amount. Bankruptcy is the worst backdrop of this practice. A huge decline in the ratio of working capital over a period can also be dangerous for the future evaluation. For instance, if the sales of the company are decreasing in volumes, its receivable accounts number will also continue to get lesser and lesser. Working capital provides an idea company's investors that underlie in the operational effectiveness. If the company does not operate in the efficient manner, it would come up in the high ratio of working capital. This thing can be found in contrasting the working capital from one period to another. In the company's operations, slow collection might signal a primary problem. There different debt securities that help the company to park excess cash through marketable securities. These debt securities hold two significant characteristics which includes maturity date and upper bound. Bonds, stock and other financial instruments are the key instruments that hold the company's cash in lieu. These instruments are also considered in the financial statements in minor investments. There are certain reasons for applying marketable securities in the company's assets, in which the best is the higher return of these securities.

Being a financial advisor of ...