Question

a. Report the Management of Just Born LLC, on various decisions you will make in capacity of Financial Manager focusing on financial markets, its classifications, cheapest source of funds and the role of Muscat Securities Market in sourcing capital with reasoning and justification

Answer 1

A. As a finance manager, it is important to understand about the current scenario in the finance market. As a part of sourcing, Just Born LLC can raise funds through private equity (issuance of shares to new venture investors), obtain bank loan or issuance of shares in public by making it listed on Muscat Securities Market. If the company opt to raise funds through issuance of equity share than it would be classified under Stockholder’s equity. And if company decided to obtain funds through bank loan, than it would classified under Long Term Borrowings. Considering cheap source of fund, it would be funds raised by issuance of equity shares as it will be cost lesser than obtaining bank loan and pay interest. However, it will dilute the ownership and profit with other new investors. The role of Muscat Securities Market will be very important as it will require compliance of all rules and regulations of the securities market for issuance of shares.

Methods that can be used to evaluate the proposed long investment across oman can be Net Present Value Method, Profitability Index Method, Payback Period Method, Discounted Payback Period Method, Internal Rate of Return Method.