1. The interest rates charged are usually higher than if it could have been issued to the market as a bond.
2. The business entity may be forced to pay principal and interest even if business entity is making a loss.
3. It increases the financial risk of the business entity due to increase of fixed commitments.
4. Some restrictive covenants may impact negatively on operations of the business entity e.g. on cash flows and dividend.
Lellah answered the question on November 8, 2021 at 07:25
- State the disadvantages of leasing as a type long term financing.(Solved)
State the disadvantages of leasing as a type long term financing.
Date posted: November 8, 2021. Answers (1)
- State the advantages of leasing as a type long term financing.(Solved)
State the advantages of leasing as a type long term financing.
Date posted: November 8, 2021. Answers (1)
- Discuss retained profit as a source of short term finance.(Solved)
Discuss retained profit as a source of short term finance.
Date posted: November 8, 2021. Answers (1)
- Discuss loans as a source of short term finance.(Solved)
Discuss loans as a source of short term finance.
Date posted: November 8, 2021. Answers (1)
- Discuss working capital as a source of short term finance.(Solved)
Discuss working capital as a source of short term finance.
Date posted: November 8, 2021. Answers (1)
- Briefly describe two sources of business finance.(Solved)
Briefly describe two sources of business finance.
Date posted: November 8, 2021. Answers (1)
- State the regulatory functions of the Capital Markets Authority as provided by the Act and the regulations.(Solved)
State the regulatory functions of the Capital Markets Authority as provided by the Act and the regulations.
Date posted: November 8, 2021. Answers (1)
- Outline the benefits and drawbacks of listing a company.(Solved)
Outline the benefits and drawbacks of listing a company.
Date posted: November 8, 2021. Answers (1)
- State and explain roles of securities exchanges in the economy.(Solved)
State and explain roles of securities exchanges in the economy.
Date posted: November 8, 2021. Answers (1)
- Financial markets can be broadly classified through two major dimensions. Discuss.(Solved)
Financial markets can be broadly classified through two major dimensions. Discuss.
Date posted: November 8, 2021. Answers (1)
- Give the solutions to shareholders and government conflicts.(Solved)
Give the solutions to shareholders and government conflicts.
Date posted: November 8, 2021. Answers (1)
- What are some the actions a company and its shareholders as agents may take some that might prejudice the position or the interests of the...(Solved)
What are some the actions a company and its shareholders as agents may take some that might prejudice the position or the interests of the government as the principal?
Date posted: November 8, 2021. Answers (1)
- Give the solutions to shareholders and auditors conflicts.(Solved)
Give the solutions to shareholders and auditors conflicts.
Date posted: November 8, 2021. Answers (1)
- What actions do auditors take which are not in the best interests of the shareholders that may cause agency problems or conflict to arise?(Solved)
What actions do auditors take which are not in the best interests of the shareholders that may cause agency problems or conflict to arise?
Date posted: November 8, 2021. Answers (1)
- Outline solutions to the shareholders and creditors conflicts.(Solved)
Outline solutions to the shareholders and creditors conflicts.
Date posted: November 8, 2021. Answers (1)
- Explain the actions taken by shareholders when agency problems or conflict arise which reduce the market value of creditors’ debts.(Solved)
Explain the actions taken by shareholders when agency problems or conflict arise which reduce the market value of creditors’ debts.
Date posted: November 8, 2021. Answers (1)
- Outline the solutions to shareholders and management conflicts.(Solved)
Outline the solutions to shareholders and management conflicts.
Date posted: November 8, 2021. Answers (1)
- Briefly discuss the conflicts that may arise between shareholders and management when the managers may be enticed to pursue their own goals rather then that...(Solved)
Briefly discuss the conflicts that may arise between shareholders and management when the managers may be enticed to pursue their own goals rather then that of the shareholders.
Date posted: November 8, 2021. Answers (1)
- Describe the agency theory.(Solved)
Describe the agency theory.
Date posted: November 8, 2021. Answers (1)
- Briefly describe the role of money in economic growth.(Solved)
Briefly describe the role of money in economic growth.
Date posted: November 8, 2021. Answers (1)