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Finance Paper
Business Financing 1

PRINCIPLES OF FINANCE

Business Financing and the Capital Structure
Week 8 Assignment 2

Business Financing 2

Business Financing and the Capital Structure

The process of financial planning used to estimate asset investment requirements for a corporation includes an estimation of the amount of funds to be raised, finding out the various sources of capital and the securities offered against the money so received and laying down policies to administer the usage of funds in the most appropriate way. The person that is usually responsible for insuring the process is executed ethically is the Finance Manager that has to estimate the financial requirements of the company. The Finance Manager should determine the sources from which capital can be raised and determine how effectively and judiciously these funds are put into use so that repayments can be done in time. Financial planning is deciding in advance the course of action for future. The concept of working capital management is the process of planning and controlling the level and mix of current assets of the firm as well as financing these assets. Working capital management requires financial managers to decide what quantities of cash, other liquid assets, accounts receivables and inventories the firm will hold at any point of time. Marketable securities in corporate finance are short-term investments in debentures and securities that can be converted into cash within a year. They are recorded as current assets on the corporate balance sheet and are used by security analysts for calculating liquidity ratios and funds readily available.



References: Melicher/Norton, Introduction to Finance, 14th Edition, 2011 Tozzi John, Raising Capital in a Slowing Economy, retrieved 10 August 2013 www.Federalreserve.org, retrieved 29 July 2013 www.bloomberg.com/markets, retrieved 29 July 2013

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