One of the important decisions under financial management relates to the financing pattern or the proportion of the use of different sources in raising funds. Most companies plan to raise funds for their capital needs using a judicious mix between owners funds (equity) and borrowed funds (debt). This mix of equity and debt actually used by a …
The cost of capital is the cost of a company’s funds (both debt and equity). In words of Solomon Erza “The cost of capital is the minimum required rate of earnings or the cut-off rate of expenditure”. From Investor’s point of view, it is the rate of return, that must be received by the firm on its investment projects, to attract …
For optimal financial decisions, it is essential to define objectives of financial management. These objectives serve as decision-criterion. Financing is a functional area of business and, therefore, the objectives of financial management must be in tune with the overall objectives of the business. The main objectives of business are survival and growth. In order to …
