7 FACTOR AFFECTING FINANCING DECISIONS. While taking financing decisions the finance manager keep in mind the following factors: 1. Cost : The cost of raising finance from various sources is different and Finance manager always prefer the source with minimum cost. 2. Risk : More risk is associated with borrowed fund as compared to owner's fund securities. Finance manager compare the risk with the cost involved and preferred securities with moderate risk factor. 3. Cash flow position : The cash flow position of the company also helps in selecting the securities. With smooth and steady cash flow companies can easily afford borrowed fund securities but when companies have shortage of cash flow, then they must go for owner's fund security only. 4. Control considerations : If existing shareholders want to retain the complete control of business then they prefer borrowed fund securities to rise further fund. On the other hand if they do not min
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