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How do I asses the specific future external financing needs of a company?

How do I asses the specific future external financing needs of a company?

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ANS: External financing is a way to raise capital or to arrange funds for the company from outside the market i.e in form of bank loan, Investments, Public issue of Shares etc. External Finance is just an additional capital the supports the day-to-day operations of an organisation.

The different sources of finance are -

  1. Government fundings, Subsidies
  2. Credit Unions
  3. Angle Investors
  4. Venture Capitalist
  5. Boot-strapping etc

The following points will help to assess the future external financing needs of a company, they are -

  • Analyse the projected cash flow of the company
  • Analyse the financial ratios such as Profitability ratio, Liquidity ratio, Efficiency ratio, Leverage ratio etc
  • Analyse the Company's Strategies
  • Do the SWOT Analysis i.e Identify the Strength, Weakness, Opportunity & Threat of the organisation
  • Determine & Analyse the Industry characteristics in which company operates
  • Prepare forecasted financial statements
  • Conduct the performance reviews
  • Assess the expectations of Stake-holders.
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