FAQs
The appropriateness of the different sources of finance depends on several factors including the purpose of finance, cost of finance, duration of finance, required amount of finance, type of the business organization, size and status of the business, gearing level, flexibility and external influences.
What are the factors affecting the choice of source of finance? ›
the type of business (not all sources of finance are available to all businesses) length of time the finance is required for. finance cost ( interest rates close interest rate The price at which you can borrow money, or the return on how much money you can save.) payback terms.
What are the 4 main factors that affect your financial decision making? ›
Personal circ*mstances that influence financial thinking include family structure, health, career choice, and age. Family structure and health affect income needs and risk tolerance. Career choice affects income and wealth or asset accumulation.
What is the 4 factors to be considered in choosing sources of short term financing? ›
There are a number of factors to consider when choosing a short term debt facility, including the amount of debt required, the interest rate, the repayment period and the fees associated with the loan.
What are the factors that affect financial system? ›
The main factors that affect the stability of the financial system are bank lending rate, tangibility, GDP growth rate, control of corruption, rule of law effectiveness, bank concentration, bank efficiency, and historical level of bank stability.
Which factor affects the financing decisions? ›
Factors Affecting Financing Decisions
Cost: Financing decisions are based on the allocation of funds and cost-cutting. The cost of fundraising from different sources differs a lot and the most cost-efficient source should be chosen. Risk: The dangers of starting a venture with funds differ based on various sources.
What are the common factors in finance? ›
Common factors include size (often measured by market capitalization), valuation measures such as price to book value ratio and dividend yield, industries and risk indices.
What are the key factors affecting financial performance? ›
The key factors that influence financial performance are: Profitability. Liquidity. Cash flow.
What are the key factors affecting decisions? ›
There are several important factors that influence decision making. Significant factors include past experiences, a variety of cognitive biases, an escalation of commitment and sunk outcomes, individual differences, including age and socioeconomic status, and a belief in personal relevance.
What are the factors affecting financial planning? ›
Financial planning is heavily influenced by many significant life events and personal goals or values, such as traveling, education, giving to charity, marriage, children, etc. These events play a crucial role and role in financial planning and can severy alter them from time to time.
When choosing a bank, consider factors like security, bank fees, interest rates, location, ease of deposit, and digital banking capabilities. Other important considerations include minimum requirements, availability of funds, customer service, investment account options, and perks offered by the bank.
What four factors affect a company's financing plans? ›
Commercial lenders will typically look at these four aspects of your business.
- Your professional profile. Bankers need to understand your project and know that you're a good risk. ...
- Your project's viability. You will need to submit a concrete business plan. ...
- Your financial strength. ...
- Your guarantee.
The main sources of short-term financing are (1) trade credit, (2) commercial bank loans, (3) commercial paper, a specific type of promissory note, and (4) secured loans.
What 4 factors may influence financial decisions? ›
Personal circ*mstances that influence financial thinking include family structure, health, career choice, and age. Family structure and health affect income needs and risk tolerance. Career choice affects income and wealth or asset accumulation.
What are the three types of financial factors? ›
Financial Factors <B></b>
- Income -- Includes all the income generated by the business and its sources.
- Cost of goods -- Includes all the costs related to the sale of products in inventory.
- Gross profit margin -- The difference between revenue and cost of goods.
Answer and Explanation: The demand for money gets affected by several factors such as the interest rate, the level of income, inflation and the uncertainties in the future.
What are the factors affecting the choices in accounting? ›
There are four important factors which affect students' career choice in accounting. These are intrinsic factors, extrinsic factors, perceptions toward accounting profession, and other social factors. Under each of these factors, there are important variables which lead students to choose accounting as a profession.
What are the factors affecting choice of bank? ›
The credit interest rate, high deposit interest rate, service charges, the minimum amount required for opening an account, and the market price of the bank share are the common factors that banks should consider so that customers choose the bank. Customers prefer easy access and convenience to do any transaction.
What are the choices of sources of funds? ›
The main sources of funding are retained earnings, debt capital, and equity capital. Companies use retained earnings from business operations to expand or distribute dividends to their shareholders. Businesses raise funds by borrowing debt privately from a bank or by going public (issuing debt securities).
