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Oftentimes when a business undergoes rapid growth in sales and profits, asset growth also increases rapidly. It may be difficult for a business to come up with the funds from suppliers, the bank, or stockholders in a reasonable amount of time. For example, if I made $30K profit this year but asset growth was $60K due to the growth, I would have to find a way to finance the remaining amount.

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โˆ™ 2007-09-21 18:20:01
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Q: How can rapid corporate growth in sales and profits cause financing problems?
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Rapid corporate growth in sales and profits can cause financing problems Elaborate on this statement?

Oftentimes when a business undergoes rapid growth in sales and profits, asset growth also increases rapidly. It may be difficult for a business to come up with the funds from suppliers, the bank, or stockholders in a reasonable amount of time. For example, if I made $30K profit this year but asset growth was $60K due to the growth, I would have to find a way to finance the remaining amount.


What has the author Chris Zook written?

Chris Zook has written: 'Profit from the core' -- subject(s): Corporations, Growth, Industrial management, Corporate profits 'Unstoppable' -- subject(s): Industrial management, Organizational change, Corporations, Growth, Corporate profits, Strategic planning 'Profit from the core' -- subject(s): Corporations, Growth, Industrial management, Corporate profits 'Beyond the core' -- subject(s): Corporations, Growth, Corporate profits, Industrial management, Strategic planning, Economische groei, Bedrijfswaarde, Strategisch management


How do you strategic audit relevance to corporate strategy and corporate governance?

Corporate strategy and corporate governance must be audited to insure that the course of action is the wisest. In the best scenario growth and profits will be at an optimum. If this is not the case, a strategic audit will show that change is a necessity.


Is profit is generally adequate to finance the significant growth of a company?

A company's profits are a key method to finance growth by using those profits into research & development. Should a company require more funding to finance growth, then issuing corporate bonds and - or taking out loans will augment the funds needed for research & development. Growth can also be funded by buying another company which has large cash reserves and or products that are very profitable. Here, the buying company must make an attractive offer and create the financing to make this deal work.


What is the Fundamental objective of most businesses?

survival profits and growth


How does the nature of a business affect its sources of financing?

The nature of a business affect from its sources of financing are by a firm's economic potential (high growth and large profits yields more possible sources of financing), the company size and maturity (firms with established track record have more financing options than startups; e.g., bankers loan based on past performance), types of assets (firms with tangible assets have an easier time borrowing money than do those with intangible assets), and owner preferences for debt or equity (the mix is a matter of preference).A great way for a small to medium sized business to solve their financing and cash-flow problems is to have their invoices factored and get 80 to 90% of the invoices value paid up front.


An increase in sales and profits generates the necessary cash required for economic growth?

An increase in sales and profits does not necessarily mean an economy will grow. The economy will only grow if the sales and profits are substantial in size.


What problems did this rapid growth pose for cities?

The problems of rapid growth are: -Food shortage -Water shortage -Health problems -More pollution


What was the original intent of the stock market?

To allow people to invest their own money in a company that showed promise of strong growth. If that growth happened, you shared in the profits. Part of the profits went into expanding the company, which created more profits - including for you, and so on. If you had invested $1,000 in Microsoft in 1983, you would be a millionaire today.


At which stage in the product life cycle do industry profits usually peak?

Growth Stage


Why growth may not be the important objective of the business?

Before growth there are most important objectives for a business, first at all to make profits maximisation, business survival.So to be survived on the market,it will have to lower its prices of the products even though it will have a lower profits.


What is Corporate Affairs?

Corporate affairs are departments that facilitate a companies growth. These departments make changes and restructure companies to keep the company growing.


What are Organic sales increase?

From: http://www.investopedia.com/terms/o/organicgrowth.asp Organic Growth The growth rate that a company can achieve by increasing output and enhancing sales. This excludes any profits or growth acquired from takeovers, acquisitions or mergers. Takeovers, acquisitions and mergers do not bring about profits generated within the company, and therefore, are not considered organic. Organic growth represents the true growth for the core of the company. It is a good indicator of how well management has used its internal resources to expand profits. Organic growth also identifies whether managers have used their skills to improve the business.


Did Dmitri mendeleev face any problems?

growth problems


A group of small investors seeking to make profits on companies with rapid growth potential?

investors


An example of growth factor in common stock is issuing new stock to provide capital for future growth?

An example of the growth factor in common stock is retaining profits in order to reinvest into the firm


How many children have growth hormone problems?

Some estimates show that there are between 10,000 and 15,000 children in the United States who have growth problems due to a deficiency of growth hormone.


What is business organic change?

The growth rate that a company can achieve by increasing output and enhancing sales. This excludes any profits or growth acquired from takeovers, acquisitions or mergers. Takeovers, acquisitions and mergers do not bring about profits generated within the company, and are therefore not considered organic.


What is real internal growth?

Real internal growth is the highest level of growth achievable for a business without obtaining outside financing. The internal growth rate for a public company can by found by taking a company's retained earnings and dividing it by total assets.


What problem did rapid growth pose for cities?

The problems of rapid growth are: -Food shortage -Water shortage -Health problems -More pollution


What has the author Navin Mathur written?

Navin Mathur has written: 'Corporate growth and business environment in Rajasthan' -- subject(s): Corporations, Finance, Growth


Describe for me your ideal company?

An ideal company has a good reputation with the public and has high growth prospects. The company should not have too many cash flow problems. The company gives incentives to the staff members when the company makes new profits.


What are the problems that growth causes for cell?

cancer


How did the paint and coatings industry do in the1960's?

The growth and profits of the paint industry trailed the rest of the economy,


What did not contribute to the economic growth in the 1950s?

In the 1950s, manufacturers of baby products reaped huge profits due to the massive military budgets further contributed to American economic growth.

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