Question

What is the FRICTO analysis for atlantic corp?

Answer 1

FRICTO analysis for Atlantic corp:

The full form of FRICTCO are as :

F= flexibility

R=risk

I = income

C=control

T=timing

O=others

All these factors are important because it effects the debt equity mix of a company.

Flexibility:

Under this factor the decision of the company should be flexible in the nature, because the debt capacity will be change according to the circumstances.

Risk:

This risk factor effect the capital structure of the company as well as deal with the converting assets into cash, hunkering down, and cash to services used.

Income:

This is another factor which effect the company, it usually for investors point of view. When any company borrow is evaluate the lower interest rate.

Control:

This factors for small level enterprise, related with the proportion of debt.

Timing:

When management is vary from the plan of strategic, and when the situation of market tempts, that time, timing factors became important

Others:

This factor can tip the decision in another way such as exit way of an investors, liquidity creations etc.

FRICTO has been applied in the decision of capital structure, decision of dividend, assessing of capital investment. When the financial decision analysed that time FRICTO model used. All equity leaves the firm with the greatest problems of flexibility.