All Saints are asking for £100 millions of capital injection.

In order to expand the company financing is becoming an important aspects that managers should concern. There are mainly two types way of financing that company can use which are; debt financing and capital financing. During the previous session, there is a debate between which financing method will be more useful? Most of people are preferring on having debt financing due to less complicated procedure and faster way to get finance. 

Despite all of the advantages in using debt financing, there are some disadvantages that most of company might face in having debt financing which is high gearing ratio. Gearing is a fundamental analysis ratio of a company's level of a long-term debt comparing to its equity capital (Investopedia, 2011). In a way, gearing is explaining how the company is finance their operation weather through capital or trough borrowing money.  Having a high gearing it means that they are having a lot of debt and it can cause a future problem in a future, whereas through having a low gearing it means that the company operation are working in a safer way but it will reduce the productivity of a company. However, most of the the managers and company are aiming to maximize the shareholders wealth that in the end force them to have a high gearing.

All saints are borrowing  £100 asking an injection from Lebanese investment group M1 Group and ex-Goldman Sachs banker Richard Sharp. According to the spokesman of all saints, this funds would also recapitalize the business and help pay for the fashion label expansions plans. On the other hand, all saints also ask the Lloyds Tsb to increase their exiting working capital facility for the group to around £50 millions from their current capital facility of £28 millions (Financial times, 2011).

Trough analyzing what All saints actually did is quiet good at the moment. Where this company are actually financing expansion trough using both capital finance and debt financing. By keep on maintaining both of their debt and capital it keep their gearing in better position. It is supported by Arnold (2008) that most of the company are aiming to maximize their shareholders wealth and always keep on expanding their business it self, by always maintain their gearing in a "good position" it will making sure that the company are in healthy condition, which is far from a bankruptcy and keep maintaining their expansion. There is no way for a company just increase either their debt of capital for running a company, but they should increase both of their financing are once a a time or in correspond with each other.