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Considerations Regarding The Role Of Capital In The Financing Decision

Author

Listed:
  • Avram Costin Daniel

    (University of Craiova Faculty of Economics and Business Administration)

  • Dan Roxana Loredana

    (West University of Timisoara Faculty of Economics and Business Administration)

Abstract

Establishing the financing sources exerts, under the conditions of market economy, a significant impact on the development of business activity. In this way it is decided upon the financial structure of the company and measures are taken to ensure its optimal character. Because preserving financial independence and autonomy is a major aspect in the process of choosing financing sources, one can observe the security offered by equity used as financing sources in the operating activity. However, the company cannot use only equity financing because the rational objective is to maximize the entity’s value, and the cost involved in raising capital will be higher than the cost of the existing one.

Suggested Citation

  • Avram Costin Daniel & Dan Roxana Loredana, 2019. "Considerations Regarding The Role Of Capital In The Financing Decision," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 2(47), pages 25-34, December.
    • Handle: RePEc:aio:aucsse:v:2:y:2019:i:47:p:25-34
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    File URL: http://feaa.ucv.ro/annals/v2_2019/003.pdf
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    More about this item

    Keywords

    financing sources; equity; financial structure; self-financing; social capital;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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