“The most appropriate financing pattern would be one in which asset buildup and length of financing...

“The most appropriate financing pattern would be one in which asset buildup and length of financing terms is perfectly matched.” Discuss the difficulty involved in achieving this financing pattern.

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Expert Solution

Finance is one of the most important and fundamental area for any firm, as we all know finance is the life blood of business, using finance most effectively is in hands of finance team and the their leader known as finance manager. Financial pattern is like blue print, which shows how money flows in and out from business. If finance manager and his team are with deep knowledge, experience and can think from many aspects with different timings may design pattern in which asset buildup and the length of financial term is perfectly matched.

For that manager must know about all the current and fixed assets available with the business and also should have knowledge about long term and short term finance availability, this is difficult to know the availability of short term and long term finance with business in any specific time duration in future, and for what time it is available in business, because many uncertainties are there with business and on other hand it is not possible to change structure of debt and equity ratio continuously to meet current demands.

So above are some difficulties involved in pattern where assets buildup and length of financing terms are perfectly matched.

jeff jeffy answered 1 month ago

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