...FINANCING OPTIONS FOR SMALL AND MEDIUM SCALE ENTERPRISES IN NIGERIA BY SAS ARUWA BY SAS ARUWA Department of Economics and Management Sciences, Nigerian Defence Academy, Kaduna Abstract Government has identified the need for the development of Small and Medium Scale Enterprises (SME). One of such sectoral strategies is the introduction and pursuit of policies such as concessionary financing to encourage and strengthen the growth of SMEs in Nigeria. In this paper, a random sample of 10 formal/ informal finance sources and 20 SMEs in 6 selected Small and Medium industries in Kaduna and Abuja have been studied. We found that financing options for SMEs are numerous but access to these funds has been difficult inspite of several government initiatives. We also found that the Small and Medium Industries Equity Investments Scheme (SMIEIS) fund lacks standard guideline for fund disbursement, the unregulated informal finance institutions finance the SMEs much more than the formal sources and the informal sources make up more than half of the SMEs’ mix of funds. It is recommended that the informal source of financing is a potentially important source of micro financing. Savings in them should be further encouraged through regulation, government intervention by way of active participation of community and development banks in local business associations. SMEs should consider all financing options that maximize the value of the business enterprise. 1.1 INTRODUCTION The significant...
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...Financing Options for XYZ Corporation Nicole Byes FIN / 410 August 03, 2015 Ruth Smith As corporations anticipate growth and inventory increase over time their financial managers need to understand the need for inventory financing and inventory management (Block, Hirt, & Danielson, 2009). Looking at the long-term trend XYZ Corporation assets are likely to increase over time. The key to current asset planning is the ability of management to forecast sales accurately and match the production schedules with the sales forecast. "Financial forecasting is essential to the strategic growth of a business. The process of forecasting forces a business to consider seasonal and other effects on cash flow. In essence, financial forecasting allows the financial manger to anticipate events before they occur, specifically the need for raising funds externally (Block, Hirt, & Danielson, 2009). The financial manger's selection of external sources of funds to finance assets may be one of the firm's most important decisions. "The axiom that all current assets should be financed by current liabilities (accounts payables, bank loans, etc.) is subject to challenge when one sees the permanent buildup that can occur in current asset (Block, Hirt, & Danielson, 2009)". According to our resources, XYZ Corporation is experiencing an average collection period of 120 days. The industry average is about 75 days. The corporation has also experienced an increase in its business in the...
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...especially when it applies to something as important as a vehicle and financing it through the dealer. Thankfully, the following information should help you understand your options more fully. Why Car Dealers Offer Low Financing Options When you go to a car dealer, you're likely to notice that they are very excited about getting you to sign a credit deal or to get credit through their own financing. Why are they so up in arms about this? Basically, it helps stimulate sales and ends up making them even more money. How? Think of the last time you when car shopping. You may have noticed that dealers constantly advertise on having the lowest available financing. They offer these low rates...
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...FIN 100 WEEK 8 ASSIGNMENT 2 – BUSINESS FINANCING AND THE CAPITAL STRUCTURE To purchase this Click here: http://www.activitymode.com/product/fin-100-week-8-assignment-2-business-financing-and-the-capital-structure/ Contact us at: SUPPORT@ACTIVITYMODE.COM FIN 100 Week 8 Assignment 2 - Business Financing and the Capital Structure Businesses have to make many financial decisions that have a direct impact on operations and the ability to successfully compete in the marketplace. Base your writing on the information from the course coupled with information located in the Strayer databases or Internet. Write a three to four (3-4) page paper in which you: 1. Explain the process of financial planning used to estimate asset investment requirements for a corporation. Explain the concept of working capital management. Identify and briefly describe several financial instruments that are used as marketable securities to park excess cash. 2. Assume that you are financial advisor to a business. Describe the advice that you would give to the client for raising business capital using both debt and equity options in today’s economy. 3. Explain why a business may decide to seek capital from a foreign investor indicating the risk and rewards for such a decision. Provide support for rationale. More Details hidden... Click Here to Buy this; http://www.activitymode.com/product/FIN 100 Week 8 Assignment 2 - Business Financing and the Capital Structure Activity mode aims to provide...
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...efficient means of operations (Gordan, 2015). Currently in the present economy, businesses are competitive with one another, and to own and operate a business is proving to be costly. Bootstrapping In business, there are direct and indirect expenses that are required on a monthly basis. However, if an entrepreneur wants to be successful, adding staff personnel, materials and increase marketing strategies in order to remain competitive to see continuous growth is essential. However, this might not be probable without a viable capital base (Bulman, 2005). Some business use the means of credit cards to help in financing investments like the purchase of business equipment, however, when it comes to fashioning spaces to increase manufacturing, businesses might run out of capital. The down fall of this might mean that exhausted credit cards use to help in business financing has extended its limit putting the business in an unwarranted situation. One viable way to help sustain a business with its...
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...Economic Integration 2007 November 2007, Vienna Hedging exchange rate risks Veronika Lammer How big is your exchange rate risk? ERSTE GROUP − What is the net currency risk? - Not only receivables, but also liabilities can bear exchange rate risks as well as inventories, other assets and financing. - Cross correlations between currencies have to be assessed. - Bulk of cash flows with different currency risks at different times have to be taken into account. - Price sensitivity of goods to exchange rate fluctuations. - In the end, the important figure is the influence of exchange rate fluctuations on profits, not on sales. CEEI November 2007, Vienna Hedging exchange rate risks 2 Reducing currency risk ERSTE GROUP − Is currency risk a problem for your company? − Could you reduce your currency risk by changing your suppliers or employing a different financing strategy? − Do you want to hedge your currency risk - all the time, or just sometimes? - to the full amount, or just partly? - You should define rules for hedging, especially if you decide to hedge only sometimes or partly. CEEI November 2007, Vienna Hedging exchange rate risks 3 Change Financing ERSTE GROUP − One relatively simple method of reducing your currency risk is to take a loan in the currency in which you have the highest amount of receivables. - You can pay off the loan directly with receivables. - This protects you from a longer-term downward trend in the currency of your...
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...3. Should Merck bid to license Davanrik? How much should they pay? Our team will recommend Merck bid to license Davanrik given the following reasons: 1. One of the major advantage of the company is its patents of new drugs. According to the case, we know that four drugs will expire by 2002 and those drugs are regarded as the so-called star-products of the company. According to the company’s financial statement, we learn that Merck’s net income margin has declined from 19.52% to 18% and the research and development cost has been decreased in terms of percentage of sales. So we believe that Merck should increase its expenditure on research. On the expiration of the drugs, the sales will decreased dramatically as competition emerges. So in order to maintain its competition edge, the company need to develop new drugs. 2. Even though the company used to develop new compounds primarily through internal research, we believe that working with LAB Pharmaceuticals will give Merck a synergy effect to obtain a better result. Given LAB Pharmaceuticals’ performance in the past, we believe that Merck’s plentiful experience will sure to make to most of the pre-clinical development of Davanrik. 3. According to the balance sheet, we can learn that Merck has sufficient cash to support the licensing process and we believe the company has the ability to absorb the potential loss on failure. So the risk is tolerable for Merck. So we will suggest Merck bid to license Davanrik. As for the bid...
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...Traditional VS Islamic Financial Derivatives To: Prof. Naser Abu Mustafa By: Mwaffaq Al Jayousi & Mohammad Al Shdooh Abstract This study focuses the light on defining financial derivatives and briefly describe their different types (Options, Forwards, Futures, Swaps, etc.). At the same time it tries to find if these financial derivatives exists in the Arab world, how they are implemented, and if we have an Islamic alternatives for them. Introduction There is a big debate in the Arab world regarding the usage of financial derivatives, Wither they are legal according to Islam or not, and If they are illegal in Islam; are there any Islamic alternatives to them. First we have to ask our self: Is there any need to use derivatives? And why they recently became so popular in the western countries? The need for financial derivatives emerges when people realize that there must be a way to reduce the risk associated with the trading of different kinds of goods. Risks such as price fluctuations and the uncertainty about the future market conditions. And since there are some people who are willing to bear this risk instead of us, this market took off and recently because of the communications revolution it flourished. Then why these financial derivatives did not reach the Arab world? The answer is simply because they hugely rely on speculations and anticipation; which are considered illegal according to Islam. But someone can ask: if it is illegal in Islam, then how come we...
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...Question #1: A “real option” is a choice that becomes available with a business investment opportunity. Real options can include opportunities to expand and cease projects if certain conditions arise. They are referred to as "real" because they usually pertain to tangible assets such as capital equipment, rather than financial instruments. Real options differ from financial options in that with financial options usually an underlying asset such as a stock is traded. Taking into account real options can greatly affect the valuation of potential investments. It does not obligate the owner to take any action, it just gives the right to buy or sell an asset. Examples of real options include developing new products expanding an existing product line, entry to a new geographical area as well as abandoning certain operations. There are several tools and techniques that are available for managers to analyze the profitability of a project. There is the discounted cash flows method which would ignore the option and calculate the net present value. There is a qualitative assessment that shows the value of the option increases is the project is risky or there is a long time that is needed to wait before exercising the option. The decision tree analysis is a tree like model that shows probable outcomes of the different decisions. Using the existing model for corresponding financial options, this resembles a financial call option. It is basically a call option with an expiration date ...
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...LECTURE 7: BLACK–SCHOLES THEORY 1. Introduction: The Black–Scholes Model In 1973 Fisher Black and Myron Scholes ushered in the modern era of derivative securities with a seminal paper1 on the pricing and hedging of (European) call and put options. In this paper the famous Black-Scholes formula made its debut, and the Itˆ calculus was unleashed upon the world o 2 of finance. In this lecture we shall explain the Black-Scholes argument in its original setting, the pricing and hedging of European contingent claims. In subsequent lectures, we will see how to use the Black–Scholes model in conjunction with the Itˆ calculus to price and hedge all manner of o exotic derivative securities. In its simplest form, the Black–Scholes(–Merton) model involves only two underlying assets, a riskless asset Cash Bond and a risky asset Stock.3 The asset Cash Bond appreciates at the short rate, or riskless rate of return rt , which (at least for now) is assumed to be nonrandom, although possibly time–varying. Thus, the price Bt of the Cash Bond at time t is assumed to satisfy the differential equation dBt (1) = rt Bt , dt whose unique solution for the value B0 = 1 is (as the reader will now check) t (2) rs ds . Bt = exp 0 The share price St of the risky asset Stock at time t is assumed to follow a stochastic differential equation (SDE) of the form (3) dSt = µt St dt + σSt dWt , where {Wt }t≥0 is a standard Brownian motion, µt is a nonrandom (but not necessarily...
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...MULTINATIONAL CAPITAL STRUCTURE and COST OF CAPITAL ➢ Capital structure – refers to the proportion of LT debt and equity and the particular forms of capital chosen to finance the assets of the firm ➢ Mgment must choose: ■ the proportions of D and E ■ the currency of denomination ■ fixed or floating rate interest payments ■ indenture provisions ■ conversion features ■ seniority ■ maturity o Perfect mkt assumptions: -frictionless mkts -equal access to mkt prices -rational investors -equal access to costless information MM’s irrelevance proposition o With = access to perfect financial mkts, individuals can replicate any financial action that the firm can take o This leads to MM’s famous irrelevance proposition: -if financial mkts are perfect, then corporate financial policy is irrelevant The converse of MM’s irrelevance proposition o If financial policy is to increase value, then it must either -increase the firm’s expected future cash flows or -decrease the discount rate in a way that cannot be replicated by individual investors. Financial Mkt integration v Segmentation o In integrated financial mkts, real after tax rates of return on equivalent asset are = o Factors contributing to segmentation include: -prohibitive transactions costs -different legal and political systems -regulatory interference (eg barriers to financial flows) -different taxes -information...
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...Fin (IB) 3551: International Finance Homework Problem set #2 Problem Set 2 (problems only) – BOP, crisis, currency derivatives, corporate risk I BOP 1. According to popular opinion, U.S. trade deficits indicate any or all of the following: a lack of U.S. competitiveness owing to low productivity or low-quality products and/or lower wages, superior technology, and unfair trade practices by foreign countries. Which of these factors is likely to underlie the persistent U.S. trade deficits. Comment/Explain. Although popular opinion believes these factors are likely to underlie the trade deficits, none of these factors underlie the persistent U.S. trade deficits. These factors affect other countries more than the U.S. however run trade surplus. American trade deficits reflect the U.S. savings deficit. 2. Identify the correct BOP account for each of the following transactions. a. A German-based pension fund buys U.S. government 30-year bonds for its investment portfolio. Financial account: portfolio investment liabilities b. Scandinavian Airlines System...
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...Disclaimer This PDF is a section of the Unilever Annual Report & Accounts and Form 20-F 2003 provided to Unilever's shareholders. It does not contain sufficient information to allow a full understanding of the results of the Unilever Group and the state of affairs of Unilever N.V., Unilever PLC or the Unilever Group. For further information the Unilever Annual Report & Accounts and Form 20-F 2003 should be consulted. Certain sections of the Unilever Annual Report & Accounts and Form 20-F 2003 have been audited. Sections that have been audited are set out on pages 73 to 125, 131 to 147 and 149 to 150. The auditable part of the Directors' Remuneration report as set out on page 68 has also been audited. The maintenance and integrity of the Unilever website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters. Accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially placed on the website. Legislation in the United Kingdom and the Netherlands governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Disclaimer Except where you are a shareholder, this material is provided for information purposes only and is not, in particular, intended to confer any legal rights on you. The Annual Report & Accounts and Form 20-F does not constitute an invitation to invest in Unilever...
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...that the industry as a whole faces. The biotech industry is truly what one would describe as a high-risk, high-reward venture. Because Mogen and the rest of the industry faces strict and rigorous standards set by the FDA, projects often fail or have extremely long lead-times, making investments riskier and additional compensation a must compared to most other industries. Many research efforts lead to failed projects due to FDA rejection and other projects face the threat of “biosimilars,” which are essentially copies of the drugs, once the product reaches the end of the patent-protection period. At the time, MoGen had several drugs that faced the threat of biosimilar competition in Europe, all due to patent expiration. Mogen’s Financing Strategy By January of 2006, MoGen had five main products that had been derived from R&D initiatives. Due to the incredible success of this product lineup, MoGen was able to offset other unsuccessful R&D write-offs and report $12.4 billion in sales and $3.7 billion in profits in 2005. Sales increased 29% annually over the past 5 years, and EPS had gone from $1.81...
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...Family Name: First Name Student ID Signature University of New South Wales School of Banking and Finance FINS 1612 Capital Markets and Institutions Final Examination Session 1 2006 Instructions: Time allowed: 2 hours + 10 minutes reading time During reading time the candidate is not to make any notes. Total number of questions: 90 (1 mark each) All questions are to be answered. This exam constitutes 50% of your grade. Write and sign your name and student number on the examination question paper. Also enter your name and registration number in the spaces provided on the multiple choice answer sheet. All answers must be recorded in pencil on the multiple choice answer sheet provided The examinations office will provide calculators for the exam. The candidate is not allowed to use any other examination aid. This paper may NOT be taken out of the examination room. Please identify the letter of the choice that best completes the statement or answers the question and record your selection on the answer sheet provided. There are 90 Questions. Chapter 2: 1. The level of banks’ share of assets of all Australian financial institutions from the 1950s onwards first _______, then in the 1980s _______, and recently has _______due to securitisation of banks’ assets. A: increased; decreased; increased B: increased; decreased; remained stable C: decreased; increased; decreased D: decreased; increased; remained...
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