Hi I am studying for CA exam. May I know, What is financial restructuring and its need?
0
0
Answer Now
Comment
Report
3
Answers
Working capital from banks including loans through commercial papers
Debentures
Bonds
Credits from suppliers
Trade deposits
Public Deposits
Deposits and loans from directors, their relatives and business associates
Deposits from shareholders
GDRs, ADRs, FCCCBs
Important Note โ Preparing for CA Final?
CAKART provides Indias top faculty each subject video classes and lectures โ online & in Pen Drive/ DVD โ at very cost effective rates. Get video classes from CAKART.in. Quality is much better than local tuition, so results are much better.
Watch Sample Video Now by clicking on the link(s) below โ
For any questions Request A Call Back
> Financial restructuring and its need
**Meaning**
--Corporate financial restructuring is any substantial change in a companyโs financial structure, or ownership or control, or business portfolio, designed to increase the value of the firm. If you want to increase the value of your firm, you may need to reorganize your financial assets in order to create the most financially beneficial environment for the company.
--What does financial restructuring entail? In the case of excessive debt, we negotiate directly with creditors and vendors to create repayment plans that are acceptable to both parties. Through limited asset liquidation and accounts receivable funding, we secure capital that the company can use to expand. We also help create a business plan that details the financial direction of the company and the steps needed to achieve success.
**Need for financial restructuring**
--Necessity for injecting more working capital to meet the market demand for the companyโs products or services.
--When the company is unable to meet its current commitments
--When the company is unable to obtain further credit from suppliers of raw materials, consumable stores, brought โ out components etc.and from other parties like those doing job work for the company.
--When the company is unable to utilize its full production capacity for lack of liquid funds.
Financial structure of a company comprises of:
----------------------------------------------
- Paid up equity and preference share capital
- Reserves
- Borrowings in the form of
- Long term loans from financial institutions
- Working capital from banks including loans through commercial papers
- Debentures
- Bonds
- Credits from suppliers
- Trade deposits
- Public Deposits
- Deposits and loans from directors, their relatives and business associates
- Deposits from shareholders
- GDRs, ADRs, FCCCBs
- Funds raised through any other local instrument.
Need for financial restructuring
--------------------------------
1. Necessity for injecting more working capital to meet the market
demand for the companyโs products or services.
2. When the company is unable to meet its current commitments
3. When the company is unable to obtain further credit from suppliers
of raw materials, consumable stores, brought โ out components etc.
and from other parties like those doing job work for the company.
4. When the company is unable to utilize its full production capacity
for lack of liquid funds.