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Explain how a firm that expects to need funds during the coming year might make sure...

Explain how a firm that expects to need funds during the coming year might make sure that the needed funds will be available.

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Answer #1

The company can raise funds from the following ways to be made available next year:

1. It can increase its reserves by having a stringent dividend policy i.e. to pay lesser dividends and retain to meet the funds requirement.

2. It can also raise funds through selling some its held to maturity investments or liquidate investments that have held to fund certain projects.

3. The firm can also used external financing if the internal sources of finances do not suffice. External financing includes taking bank loans, issuing common stock and other forms of debt.

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