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The Decision on Firm Funding

Author

Listed:
  • Ilie Răscolean

    (University of Petroşani, Romania)

  • Ileana-Sorina Rakos

    (University of Petroşani, Romania)

Abstract

Microeconomic funding decision is complex and must ensure the selection of sources of financing at the lowest cost of procurement, but other economic criteria and constraints to which a company is subject. We distinguish, depending on the destination of the financing sources, two categories: short-term financing sources to cover the needs of the exploitation cycle and medium and long-term funding sources for investment financing. Depending on sources of origin, sources of funding are grouped into equity and borrowed sources. The paper presents the situation of a company that needs borrowed sources of shortterm loans to finance the needs of the operating cycle. Depending on the offer, the bank accesses a short-term loan package considered advantageous for the development and development of the specific activity.

Suggested Citation

  • Ilie Răscolean & Ileana-Sorina Rakos, 2016. "The Decision on Firm Funding," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 16(2), pages 117-128.
    • Handle: RePEc:pet:annals:v:16:y:2016:i:2:p:117-128
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    More about this item

    Keywords

    financing decision; sources of finance; equity; borrowed financing sources; operating debts; bank loans; discount; factoring; lump-sum; leasing; bond issues; credit line;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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