Small Business Finance

Small Business Finance

Every company, regardless of its size and the mission can be considered as a financial institution. Management of an organization, especially a company with questions and decisions that have significant financial implications faced. The questions must be answered such as:

• What type of machinery and equipment should buy the company?

• How should raise the finances of the company?

• How much money will invest the company's stores?

• What should be the company credit policy?

• How should enterprises evaluate and monitor their financial performance?

Business Finance is concerned largely with the acquisition and use of funds from a company. Its scope may be defined in terms: How big is the company to the following questions and how fast should it grow? How should the composition of the assets of the company? What should the mix of financing of the company? As the company should analyze, plan and manage their financial affairs?

In general, the corporate financing is on the premise that the company's goal should be to maximize the value of the company to its equity shareholders. What is the justification for this goal? It seems a reasonable guide for business decision may be submitted, and to promote the efficient allocation of resources in the economy. This saving is primarily based on the expected return and risk and the market value of equity of a company reflects the risk-return trade-off by investors made available on the market.

Thus, if a company has maximized the value of its equity, is to ensure that their decisions are at the risk-return preferences of investors in line. This suggests that it optimally distributes the resources. If a company does not pursue the objective of maximizing shareholder wealth, this implies that their actions lead to sub-optimal allocation of resources. This in turn leads to a lack of capital and lower economic growth.

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