Concept introduction:
Expansion financing can be defined as capital which is required to enlarge the size of an organization through various modes. Expansion financing can be used for various purposes such as launching of a new product or the acquisition of new customers/ market. The expansion is done by an organization for its growth to expand the area or scope of an organization. The financing can be done through various modes such as financing from internal accruals, equity financing, loan from bank or financial institutions etc. The mode of financing depends upon various factors such as nature of business, company strategy for expansion,
We have to determine the facts relating to financing for expansion.
Want to see the full answer?
Check out a sample textbook solutionChapter D Solutions
Managerial Accounting
- Atlantis Inc. is in need for funds for its expansion plan. It approaches Uni Bank with its business plan for financial assistance. What is this source of funding known as?arrow_forwardBelow you have the three types of financial management decisions. Match each type of decision to a business transaction that would be relevant. Capital budgeting A. Deciding whether to issue new equity and use the proceeds to retire outstanding debt Capital structure B. Deciding whether to expand a manufacturing plant Working capital management C. Modifying the firm's credit collection policy with its customersarrow_forwardA. Determine the decision nature of each of the following issues: What are the least expensive sources of funds for the firm? A large retailer such as LuLu Hypermarket, deciding whether to open another store? Will we purchase on credit or will we borrow in the short term and pay cash? The decision to develop and market a new software by a company such as Microsoft. Choosing among lenders and among loan types?arrow_forward
- Suppose Mr. Asib want to start a business in your local community. How much will be Mr. Asib's Start-up capital, second stage, and acquisition capital? How would you fund each capital amount? In which areas will mr. asib utilize this capital? Explain with justification.arrow_forwardIn starting your start up, it is absolutely important to possess funds for doing the business, Considering the fact enlist the different sources of capital for startup’s that would act as source for the funds?arrow_forwardMr Rahman the owner of Cahaya Entreprise is interested to apply business financing from Bank Islam Behad. The financing will be used for purchasing business raw materials, payment for water and electrical bill as well as for worker salaries. What is the appropriate form of capital for financing application? Select one:A.Growth capital/ Modal pengembangan B.Working capital C.Fixed capital D.Initial capitalarrow_forward
- Determine the decision (the investment decision, or the financing decision, or the dividend policy decision) nature of each of the following issues: a) What are the least expensive sources of funds for the firm? b) large retailer such as LuLu Hypermarket, deciding whether to open another store? c) Will we purchase on credit or will we borrow in the short term and pay cash? d) The decision to develop and market a new software by a company such as Microsoft. f) Choosing among lenders and among loan types?arrow_forwardYou are establishing a new warehouse in sparks Nevada to better accommodate your customers in the western half of the U.S .you will have to access a specific amount of cash in a periodic basis as the need rises . What is your best funding option ? A.family and friends B. Intermediate loan C.angel investor D. Trade credit E.Venture Capitalist F. Short term loan G.IPO H. Personal assets I. Long term loan J. Bank line of creditarrow_forwardEvery business needs money to fulfill its financial requirements and also for growth. Business owners try to find money from various sources to fund their businesses.Required:Briefly explain the following sources of finance:(a) Hire Purchase (b) Factoring (c) Equity Share Capital(d) Preference Share Capital (e) Leasing (f) Debentures (g) Depreciation fundarrow_forward
- Answer the question below When planning on starting up a new business create a plan on how you will raise funding for your business.arrow_forwardProjects associated with a business plan will require funding. The funding request is a critical part of the business plan. Funding may be obtained through various ways, including private borrowing or selling equity shares in the company. Prepare a discussion of the following questions: a. What information will be needed to develop the funding request? b. How do you see this information being used to support the funding request and the other business functions? c. How do you see the information for the funding request being researched and developed?arrow_forwardDiscuss different financing alternatives based on the processing industry and market using Private Equity Financing. After discussing these options, recommend one that you find most suitable. You are encouraged to be as innovative and creative as possible. Present different scenarios and how the types of financing would work to benefit the organization. Include the key risk factors and how you would mitigate them.arrow_forward