Question

ABC ltd. Is not having a good liquidity position.It has invested in long term investment projects and
will get a smooth cash flow after five years.It is not in a position to bear the risk of the fixed burden of paying
interest.
a.)Suggest which source of finance is suitable for this company.

Answer 1

ABC ltd. should make Equity shares and Retained Earning as source of finance for the company.

Explanation:

ABC ltd. can plan for equity-type capital for their operations, which could be to purchase assets and fund operations. The equity is used to either start operations or for growth capital. The funds from the issuance of equity can be used to pay off debt or paying interest part.

ABC ltd. can also use the retained earnings for re-investment into the company to cater to their needs of paying interest part.

Answer 2

Answer:

thanks for this answer