Best Financial Strategies During Difficult Times The spirit of investment and entrepreneurship as the driving financial force behind the success of the family-owned companies. Initiatives
The following article explains the outline of the main motives and financing instruments sensitive to changes in the world after the crisis. Also look as well as two examples of the funding situation is not ideal, and that could push companies well positioned to financial bind but to a state of lack of liquidity. Finally, the article presents a matrix to make the decision in order to determine the funding strategy and framework for the audit of the financial strategic priorities in the wake of the crisis.
The main drivers of corporate finance and the world of finance:
Corporate Finance aims to provide the appropriate amount of financial resources for all company procedures at all times. Therefore, it serves as an essential requirement for the proper management of any company.
What is different motives for funding?
First of all, funding is required in order to pump cash for daily operations. Under optimal situation is to have a positive cash flow from operations it should also increase over time because it provides debt service resources, and invest in growth, and reward shareholders. In the case of growth, it is very natural to become operating cash flow is negative, either short or extended periods of time. Criticism who consumed working capital are not compensated immediately by interviewing profits. In this case, it needs to fund growth to compensate for the shortage of liquidity. Moreover, any growth strategy can not be followed unless there is sufficient production capacities, which need to advance targeted investments in infrastructure, which include land, buildings and equipment production capital expenditures. Finally, the disorder may cause the level of a sectoral or macro-economic decline in revenue and profit decline and then there is the need for what is known as the financing of emergency conditions.
The comprehensive range of Islamic financing alternatives, including those that generate benefits to the owners of the external parties can be categorized generally into capital sagittal and capital borrower. Rubix Project Scam Companies can own to get new equity financing from venture capital, and the head of the developing money, sources of private property rights. And can companies put into the public domain to obtain contributions through the issuance of new shares during the initial public offering or subsequent IPO, whether the stock is a “special” put on a few investors and not others, or through offering “public” on the broad investor community. For borrowing for funding, funding can be provided either on a short or long-term basis through banks and other financing institutions and non-banking. In addition to traditional lending instruments, come in subordinated bundled or initial financing systems that can be planned so as to be a substitute for property rights, and the use of these systems governed by the availability and conditions associated with it. The following is a comprehensive list by leveraged:
Short-term long-term collage
Ensuring financing accounts receivable / accounts receivable sale of long-term bank loan / direct loan balance (initial)
Funding to ensure the assets of institutional bonds convertible bonds (safe)
Funding to ensure the sale and leasing contracts promissory notes
Financing bonds series suppliers of high yield / bills in kind
Concessions bank lending short-term possessory pledge to ensure a second-class
And require the “golden rule for institutional finance” the necessity of matching assets and liabilities, noting that the maturity of the financing tool should always be consistent with the period in which the asset finance. As a result, the long-term investment (for example, real estate or production facility project) should not be financed by short-term religion (for example, a loan for a year / three years) in order to avoid the risk of refinancing. Unfortunately, this was the golden rule ignored often during the recent past, which created one of the biggest challenges of the contemporary economic crisis.
Lease reality at the present time:
In a world characterized by the growth of the overall economy and abundant liquidity, we find that companies often increase their balance sheets to stimulate the growth rate used cheap loans. This strategy has achieved good success until the ninth of September 2008; a day which saw the collapse of the bank, “Lehman Brothers”. The disaster that befell the financial markets later in the sudden stop of affordable bank credit to flow and thus led to a sharp drop in loan sizes available all over the world have caused. And it resulted in changes in the practices, and the damage to the international financial markets in general, to significant declines in bank lending process. It has been allocated the shrinking number and size of new loans reductase ultimately more cautious sectors, and the cases of top reliability, giving preference to shorter-term loans. The work of this trio dimensional shift in lending behavior to a huge increase in financing and refinancing risk sector to contribute in general, private companies and is listed on the stock exchange in particular companies. It has increased the deterioration of the situation occurrence of an extended-term slowdown in the economic growth of emerging markets in addition to the advanced industrial markets.