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Finance & Accounting
Pages 4 (1004 words)
Financial Analysis Name Here Name of Institution City, State Date Student name Instructor’s Name Class Name Date Financial Analysis Memo From: XXXXX To: XXXXX Date: 12th June 2012 In most companies, the sources of finance used include both debt and equity…
More significantly, financial analysis measures the financial performance of a company as in terms of profitability and investment ratios in its operations. As a result, financial analysis of a company, through the financial ratio allows the management to carry out both firms performance and the trend analysis performance for specific years. Sources of Finance More than often, companies have to seek sources of financing requires funds to purchase fixed assets, to finance growth and expansion and to increase its working capital. Nevertheless, these sources of long-term financing are not easily accessible because they include a fixed term contract and large amounts of fund (Brigham & Ehrhardt, 2011). As a result, companies opt to raise long-term capital by issuing shares to shareholders from the public. There are two types of shareholders including equity shareholders who are directly involved in company affairs and the preference shareholders who are entitled to profits before equity shareholders (Davies & Pain, 2011). In addition, companies can use long-term loans as sources of finance from financial institutions. These loans could either be from government or private financial institutions who give long-term loans at reasonable rate of interest and repayment period (Gowthorpe, 2011). More so, the companies can use debentures as there sources of finance that are issued to the public. ...
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