Some Business Questions
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1. What is an aggressive financing strategy?
2. What are the components of aggressive finance strategies?
3. What is difference between the aggressive and conservative financing model?
4. Under what circumstances would you use either one?
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The response addresses the queries posted in 722 Words, APA References
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The response addresses the queries posted in 722 Words, APA References
1.
An aggressive financing strategy is one that uses the short-term funds for financing all the seasonal needs of a firm and a part of its permanent needs (An Aggressive Financing Strategy, 2008). It finances only some of its fixed assets (and not all the current needs and requirements) through long term funds.
The cost considerations in an aggressive strategy include the following:
It lowers the cost through the use of most of the cheaper short-term financing.
It should result in high profitability.
The risk considerations under such a strategy are:
It possesses a high risk due to the reason that the net working capital is minimized
It might be difficult to get the long-term funds in an emergency.
2.
Under an aggressive finance strategy, the firm finances a part of its permanent current assets and even its fixed assets with the short term sources of funds (Horne, Wachowicz & Bhaduri, 2008). The short term sources of funds include the short term loans, bank overdraft, marketable securities and accounts payable.
3.
A conservative financing strategy is one that employs ...
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