Distinguish Between Business risk and financial risk. Business risk is the risk that a business faces in not being able to generate adequate income to cover operating expenses. Financial risk is the risk that a business will not be able to generate enough cash flow and income to pay their debts and meet their other financial obligations. Distinguish Between Business risk … [Read more...] about Distinguish Between Business risk and Financial risk
Corporate Finance
Valuation Purposes
Valuation Purposes Valuation Purposes. Photo Credit The purpose of the valuation may be summarized as under - For return on investment. The purchase of a business return on investment is an important consideration. Purchasing the controlling interest in a business. This serves the same purpose as the purchase of an active business. However, the part purchased should … [Read more...] about Valuation Purposes
Basic Valuation Model
Basic Valuation Model. The general principle of valuation also applies to share or stock valuation. The value of a share today is a function of the cash inflows expected by the investors and the risk associated with the cash inflows. The cash inflows expected from an equity share will consist of the dividend expected to be received by the owner while holding the share and the … [Read more...] about Basic Valuation Model
Sources of Finance for a Business
Sources of Finance for a Business. It includes the dynamics of assets and liabilities over time under conditions of different degrees of uncertainty and risk. Sources of Finance for a Business For any businesses be it start-ups or established ones, there are internal and external sources. A. Internal sources of Finance 1. Personal sources: These are the most important … [Read more...] about Sources of Finance for a Business
Three Important Financial Questions
Three Important Financial Questions Why an increasing working capital is considered a relevant cost for capital expenditure decisions? Net-working capital, as we know, is the amount by which a firm’s current assets exceed its current liabilities. When a firm acquires new machinery to expand its level of operations, it experiences an increase in levels of cash, accounts … [Read more...] about Three Important Financial Questions