Funding of the Business Activity

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Management



Finance 1

Overview of the topic

The topic is related to the two main principles known as Finance and Accounting. In the current task, there is a responsibility for making various management decisions regarding the funding of the business. There are several options available for the funding of the business activity. The options are to borrow money, sell stock or license the technology. One of the options would be selected for the type of funding. The decision making analysis has a major role in this task. Therefore, all the issues and aspects related to the Finance and Accounting will be discussed in detail.

Importance of the Four Options

There are four options that would be assessed in the topic. The four options are Investment Banker, Stock Market, Financial Management and Risk Financing.

Investment Banker: The option of the Investment Banker is a suitable option for the Investor. The reason is that the Investment Banker can provide suitable advice related to the best financing option. The Investment Bankers are experts in this regard and their advice has a lot of significance.

Stock Market: The option of the Stock Market is also a good choice for the investor. The reason is that the Stock Market helps in generating funds by selling shares. The option of the Stock Market is one of the most common financing options used by the investors.

Financial Management: The option of the Financial Management is dependent on the investor's allocation of the funds used for the business activities. In this particular option, the investor needs to select a suitable debt/equity ratio. Secondly, the income and expenses decision requires a thorough analysis in order to manage the funds in the best possible manner.

Risk Financing: The option of the Risk Financing is also a reasonable option for funding the business activity. The importance of Risk Financing is quite high because it provides an option in both the debt and equity financing. Though, the debt financing has a much higher risk because of the payment of the interest along with the principal amount (Artin, 2011).

Identification of the Preferred Source of Funds

The preferred source of funds among these options will be Investment Banker. The reason for preferring the option of the Investment Banker is that the Investment Banker will provide a useful advice to the investor in selecting the best option for the financing of the business activity. The Investment Banker usually has a lot of experience in this particular work and their suggestion must be taken seriously by the investor. The investor can also ask for the follow ups of the options provided by the investor. This is going to be important because the investor must have complete satisfaction on the option recommended by the Investment Banker. The other three options were also good but the best option for the investor in this case was the Investment Banker. Therefore, this is the overall identification of the Preferred Source of Funds for this particular case (Broadbent & Laughlin, 1999).

Decision for the Selection ...
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