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Reserves and Surplus

How does cont...

Question

How does control of existing shareholders affect financing decisions?

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Solution

If existing shareholders do not want to lose the control then more of borrowed fund securities should be issued.

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Q. Explain factors affecting financing decision.

What is meant by financing decision? State any four factors affecting the financing decision.

Q. Give two factors affecting financing decision.

Q. Explain the following as factors affecting financing decision:-
(i) Cost
(ii) Cash flow position of business
(iii) Level of fixed operating cost and
(iv) Control considerations

Explain any two factors affecting the financing decision.

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