Most of the international company are having a difficulty in funding their finance in order to operate their company. During this fourth week the lecture are explaining about the fundamental of raising finance for multinational enterprise, collaborative ventures & foreign subsidiaries. In addition, there are some objective through in learning this topic which are;
- Considering the idea that the method of financing and the cost of financing might have a consequence on the profitability of the company
- Introduce the basic concepts of equity finance and debt finance
- Examine the project finance as a method of financing a collaborative venture
- Discussing the strategic reasons why companies may decide to source equity capital internationally
- Identifying and discussing the international debt finance instruments
It is believe to say that by selling bonds or using debt financing rather than equity financing it is much more useful strategy in financing their company. By selling bonds this company will get a quiet a lot of money for their operation and not-like and investment that force the company to change their management structure but trough using this method the company will be working based on the management structure that they already form. Furthermore, despite the advantages of bonds that has a minimal of 5 years for the return but also bonds are usually form the company into much more liquid and therefor it helps the cash flow of L&T.
In conclusion, by having a good strategy in financing a company it eventually decrease the un-employent rate in India and hence it will improve the standard of living inside the country. Moreover, if the L&T Infrastructure projects works well it will develop the infrastructure in India and it might also attract more foreign investors.
How much is $88 million (I presume that this is USD)in rupees? Deduction of Rs20000 or the first Rs20000 is taxed at a special rate? Please provide adequate details to aid understanding..
ReplyDeleteHow does "good financing strategy" help to decrease the rate of unemployment?
well actually a good financial strategy such as using both debt financing or equity financing it will automatically helps both capital and the cash flow inside the company.
ReplyDeleteIn relation with rate of unemployment - by company borrow money or thinking of using equity financing it will make their company bigger and eventually it reduce the unemployment rate especially this case is happen in India 10.70% because they will employe more people (http://www.indexmundi.com/india/unemployment_rate.html)
- $88,000,000 = Rupee 3,964,400,000.0000
Thank you
You said: it is believed to say that by selling bonds or using debt financing rather than equity financing it is a much more useful strategy in financing their company. What if the corporation is not doing really well interms of sales and profits and is not certain it will achiieve its targets with that certain expansion or whatever they are willing to do with the financing , wouldn't it better to acquire equity financing since debt financing come with a fixed interest rate, an obligation to pay a fixed amount?
ReplyDeleteIn this case L&T that can be consider as a good company financialy it is better for them not to use equity financing due to changin of company structure that may lead to a policiy and new strategy that will take a longer time.
ReplyDeleteYes I do agree with your statment that equity financing will be a good idea, especially when the both company is ready to resrtruce their company. In dealing with short-term finance it is better for them in using the debt financing because there is no dilution of control. The dilution of contol is a big deal for every company especially a big company, because by having this dilution it means that the company should open their all managment structure and policy to probaly change or even re-new that.