SOURCES OF FINANCING OF THE OPERATING CYCLE

Abstract

The choice of how to finance the operating activity is determined by its cost, by the financial structure of the own resources available, as well as under conditions of risk reduction, because a possible insufficiency of the financial resources influences the solvency, liquidity and profitability of the activity carried out by the company, the results of the activity and implicitly the returns expected by investors depending on the financing policy. Not always an optimal financial structure must have a minimum cost of capital, but rather a reduction of the weighted average cost of capital so as to lead to an increase in the firm's value, an increase in the security of the assets. The capital of the company is considered the sources of financing used in a permanent and sustainable way, to finance the fixed assets, and the determination of the optimal size of the capital is a problem of the top management of the company having a maximum importance in the financial management of the company.

Keywords

• financing the activity
• minimum cost
• financial structure
• working capital