StudentShare solutions
Triangle menu

Finance - Essay Example

Nobody downloaded yet

Extract of sample

It might happen that the actual results of the business diverts from the planned structure, leading to financial deviation in measurements. When the actual results match with the forecast there is a profit whereas when there is a mismatch it leads to a loss. So at the very outset it is known that the forecasts may not materialize. This is known as risk. The possibility of risk arises when there is an uncertainty regarding the outcome of an event. Suppose, a US based company wants to set up its operations in UK. For this it has to set up a new unit in UK, buy equipments, employ new staff etc. All this requires funds. This can be obtained as loans from financial institutions. But the loan comes at a cost which is the rate of interest that the company has to pay on the amount raised. This exposes the company to interest rate risk. If the rate of interest rises, the interest burden of the company increases putting a strain on the earnings.
A new investment has to face the risk of market competition. The existing competitors may have a strong market reputation. This will make it difficult to penetrate the market. If the company’s product is not accepted by the customers this might result in loss of huge revenues. It is important that the management has proper strategies in place to counter this risk.
The company accepts a project based on an anticipation of future cash inflows. But there remains an uncertainty about the generation of the future cash flows. If an organization sells goods on credit, there is a possibility of non-payment by the debtors. This will impact the profitability of the project. To ensure that the non-payment does not affect the project performance the company must take the requisite steps.
The overseas operations of the company give rise to foreign currency receivables and payables. It has to pay for the purchase of raw material, equipments and other costs in the foreign ...Show more


There lies a risk of non-availability of funds for the project, non-realization of anticipated cash flows, default of debtors, adverse movement of foreign currency for overseas transaction, unfavourable movement in interest rates etc. In the…
Author : antwan50
Finance essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

The Independent Commission on banking also known as Vickers Commission was also asked to consider competition in the UK banking sector. The UK government published its formal response to the Vickers Report in 2011 and has agreed with most of the recommendations made by the Vickers Commission.
4 pages (1000 words) Essay
This process of international expansion is made possible by the business corporations depending on certain premises like conducting trades related to exporting of commodities to foreign nations, through rendering investment in business units created in foreign territories, opening up of new production units in the foreign locations
4 pages (1000 words) Essay
Finance Name Institution Table of Content Introduction 3 Main Body 4 Conclusion…8 References…9 Appendix…10 Introduction The performance of a company is essential towards its growth. There are various internal, as well as external factors that have a great influence on the success of a business (Albert, 2008).
5 pages (1250 words) Essay
Some countries cooperate and jointly develop oil export capacity, while others focus on attracting enough investment to create their own routes. The oil and gas industry in the Azerbaijani is controlled by the major company State Oil Company of the Azerbaijan Republic (SOCAR).
5 pages (1250 words) Essay
In United Kingdom all operational financial institutions are incorporated under the “Financial Services Authority” which is a self-governing non-legislative organization, aided by the legal powers under the “Financial Services and Markets Act
10 pages (2500 words) Essay
Due to this systematic risk, the values of investments can be turned down and all this can occur because of financial transformation or other incidents that can affect the market to a great
10 pages (2500 words) Essay
In this regard, it is therefore contemplated that there must be an alternative system that can be relied in order to achieve the relative stability in the financial markets. Though Islamic
1 pages (250 words) Essay
The time for money value in this article is represented through the rating of risk free in a formula compensating the investors placing for money in a given time in an investment. This
1 pages (250 words) Essay
It is calculated as difference close price on the date of listing and offer price of issue expressed as percentage of offer price of issue. In the US market, the short
10 pages (2500 words) Essay
The two companies have poor current ratios and while this would be an indicator of inability to meet short-term obligations, it is less of a threat to a long-term investment approach. Current ratio is also just a comparison of current assets and
3 pages (750 words) Essay
Hire a pro to write
a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
Comments (0)
Click to create a comment
Let us find you another Essay on topic Finance for FREE!
Contact us:
Contact Us Now
  • About StudentShare

  • Testimonials

  • FAQ

  • Blog

  • Free Essays
  • New Essays
  • Essays

  • The Newest Essay Topics
Join us:
Contact Us