Finance and Investor Strategy Samples †MyAssignmenthelp.com

Questions: 1.How are you going to fund the company? 2.What is your dividend policy? Answers: Finance Strategy Finance Strategy involves critical decisions in every economic climate, especially in cases of start-up funds, expanding capital or in cases to hold during tough times. While obtaining funding or finances for corporate functions there are several factors that has to be considered(Smith, 2011). The types of finances might vary for varied businesses. They can be Crowdfunding, bank loan, equity or bootstrapping, funding from friends or family, Angel investors, business partners, venture capitalists, cloud funding or any other suitable methods. In equity bootstrapping method the business is expected to fund itself as it grows. In case of self-funding approach, entrepreneurs are seen to fund their own business ventures. Often businesses obtains loan from their family and friends for the purpose of raising capital. Angel investors are individuals who want to invest into businesses. Cloud funding are group of investors that access by means of internet. Venture capitalists are those eager to fund businesses during their start-up period. Crowdfunding are web-based projects that fund business ventures. Determining type of financing is primarily dependent on overall business strategy and cash flows that are generated out of the project. Cash flows that are generated from a particular project for which investment is sort is used to payback funding that is raised for it. Such paybacks can happen in varied methods as fixed payments, payments through dividends or any other processes(Johnson, 2008). Interest rates or payment terms help access and understand type of finance strategy that is to be selected for a given type of project. Investor Strategy Every Company has a set of guidelines or policy that is used to ascertain dividend policy. Divided policy helps ascertaining payments that the company needs to make towards its shareholders(Bushee, 2012). A Company can select any of the three types of dividend policy as residual dividend policy, stability dividend policy or a hybrid of the two dividend policy. Approaches to dividend policy is ascertained based on joint decisions taken by shareholders along with management of the company. In case of residual dividend policy, the company selects on internal equity generation for financing of new projects. Dividend incomes hence come from leftover equity post meeting of capital requirement for a particular project. This methods helps maintain debt is to equity ratios prior to making any sort of dividend distributions. Dividend stability policy results from any sort of fluctuations that is generated from residual policy. In stability dividends are paid quarterly as set against fractions of yearly earnings(Ingley, 2011). This is a certain dividend income method for equity holders as it generates regular income. Hybrid dividend policy is a combination of stable and residual dividend policy. As per this concept, companies view debt is to equity ratio as a long-term approach as against short term goal. This approach is adopted more by corporates towards paying off their dividends to equity shareholders. References Bushee, B. J. (2012). Investor relations, firm visibility, and investor following. The Accounting Review, 867-897. Ingley, C. M. (2011). The financial crisis, investor activists and corporate strategy: will this mean shareholders in the boardroom? Journal of Management Governance, 557-587. Johnson, G. S. (2008). Exploring corporate strategy: text cases. Pearson Education. Smith, J. S. (2011). Entrepreneurial finance: strategy, valuation, and deal structure. Stanford University Press.