Raising money for funding a given investment project is usually subject to whether an organization is in a position of paying back the venture appropriately or not. As such, it is incumbent upon an organization to device an appropriate mechanism that will ensure effective management of the investment. Additionally, it will ascertain that all the allocated funds for a given project are subject to proper use consistent with the corporate goals and objectives. Financing for any investment project always requires an in-depth analysis of the options as well as the appropriate mechanisms for the investment and the analysis into the return analysis (Maher et al., 2012). No given investor would wish to invest their money into a project that has no returns into their investment.
Business combination with the existing strategies will be useful in the sense that the tactics fit in the objectives. Besides, the approach of the business will be achievable with an investment in the portfolio that ensures the accomplishment of overall business success. Combining an investment that has been financed by internal mechanisms with one of the loans could be one of the hybrid investment options as this ensures that not only is the venture capital available but also appropriate such that the processes and critical systems in the organization could be handled effectively (Benninga & Mofkadi, 2018). Financing of any given business process will require the business systems development such that the developed system is concurrent with the existing policies and procedures.
One advantage of raising finances through the internal financing mechanisms is that an organization is likely not to be engaged with the high volumes of returns of paying loans that they receive from highly sophisticated companies through raising of financing mechanisms which are likely to boost the financial position of a given company. Equity financing is one of the explorable options for financing the enterprise in ensuring the exploitation of appropriate financing mechanisms for the business.
Seeking funding through the internal financing mechanisms is the best viable option for the business because there is the likelihood that an investment will yield high returns which in return will ensure the achievement of some of the business objectives (Maher et al., 2012). Raising money for investment through the internal financial mechanisms will ascertain the accomplishment of corporate strategies of the firm in that there will be no loans or entitlement to the financial obligations.
There is a need for the implementation of projected strategies for the proper execution of these business strategies. Besides, there will be a need for an integration of the corporate financial policies by the business to break-even as well as the desire by the management to ensure that their operations meet the strategic objectives of the stakeholders in the industry (Benninga & Mofkadi, 2018). Research shows that combining the various options for investment is usually a lucrative venture by a business.
A business could opt to use venture capital as one of the mechanisms for investment while at the same time committing almost an equivalent percentage in ensuring that the business activities and processes run effectively – this will ensure that the business progress according to the procedures that have been implemented by the policy shapers in the business (Benninga & Mofkadi, 2018). Developing appropriate feedback and a mechanism for the management of financing is always one of the critical elements that are necessary for ensuring the development of a proper business model.
Therefore, there is a need for the evaluation of the alternative financing mechanisms to come up with an appropriate financial model for managing an investment as well as developing the accurate model for managing the finances raised for the investment purposes. There is a need for the development of a financial model that will ensure that a financing initiative is backed up by an appropriate model in ensuring that an organization achieves the appropriate financing without necessarily having to accrue any financial obligations in the future.
Raising money through the internal financing mechanisms is likely to be the most viable option as it will ensure the creation of a useful financing model, and this will help an enterprise overcome the costs that are related to the interests in financing a loan had it been from a financial institution or even a bank.
With an analysis into the past financial budgets and reports, it is evident that our company is credit-worthy. Additionally, ever since, the initiation of the company, there has been compliance with the procedures of loans and credit which therefore qualifies the business as creditworthy. With the recent audit results of the company, it is clear that almost all of the acquired loans are in the process of full funding with interest also being a significant aspect of consideration. The quick ratio is one of the elements that could be applicable in determining the performance of loans both in the short-term as well as in the long-term (Gibson, 2014).
As such, the conducted audit proved that the business has been prompt with the financing of the loans previously accrued, and this is a crucial element in determining the performance of an investment. When an organization holds the highest ethical as well as the legal standards, it will be possible to ensure the holding of substantial elements to manage the loan repayment as well as to model appropriate financial plans for managing the finances.
Benninga, S., & Mofkadi, T. (2018). Principles of finance with Excel.
Gibson, T. A. (2014). Securing the spectacular city: The politics of revitalization and homelessness in downtown Seattle. Lanham, Md: Lexington Books.
Maher, M., Stickney, C. P., & Weil, R. L. (2012). Managerial accounting: An introduction to concepts, methods, and uses. Mason, Ohio: South-Western/Cengage Learning.
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