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External Financing Requirements

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Discuss five key factors that affect a firm's external financing requirements.

Cite at least one reference used.

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Solution Summary

The tutorial shows you three factors that increase the need for external financing and two that decrease the need for external financing. Your tutorial is 276 words plus two references.

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External financing requirements are typically driven by five factors.

(1) The first is the growth of the firm. When the firm is growing quickly, they need more capital and so the greater need drives requirement to go outside the firm for capital (internal funding isn't large or quick enough for high growth).

(2) The second factor is the capital intensity of the firm. That is, how many assets are needed to drive sales. The higher the ...

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Carol Sargent, PhD
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  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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