Financial Management

Topics: Finance, Corporate finance, Investment Pages: 8 (2841 words) Published: April 24, 2013

Executive Summary3
Main Body4

Executive Summary
The main perspective of this assignment is also relates to one of the major functions of the finance department as a whole. The company which has been chosen for this assignment is basically a hypothetical company with the name of “XX Chemicals”. XX Chemical is basically a medium sized company and the directors of the company are considering expanding and running the operations of the company in abroad. From the entire analysis, it is found that companies have to use capital budgeting stance is extremely important from the standpoint of the company and it would be equally beneficial from the viewpoint of the XX chemical. All the answers discussed in the above sections have been answered accordingly. The company should undertake the provisions mentioned and described in this particular assignment in order to raise capital and undertake all the sufficient provision for capital budgeting. Introduction

Finance department plays a dominant role as far as the productivity of an organization is concerned (Andrew, 2001). Inevitably, the definition is not yet derived. According to management officials, organization is basically a place that surrounds with different departments in total and every department is intending to give its cent percent effort for the productivity of the company as a whole (Ackerman, 2002). Likewise other departments, the value of finance department is very much in the favor of the company as a whole as it leads to organizational productivity through the utilizations of available funds. Among different decisions, that specifically take by the finance department of a company, decisions relate to share issuance and shareholder’s management are some of them which have their own importance and significance. There are three different issues identified by the company during its operations and every issue needs to be cleared in the assignment and the same are mentioned below simultaneously. Main Body

XX Chemical, according to the case defined, is in the consideration of raising the funds required for the project through the issuance of right shares. In this part, it is required to critically examine the services of an investment banker could provide to the XX Chemical as far as rising of additional funds is concerned. Right shares which also known as bonus shares is one of the most important mediums from the standpoint of the shareholders which the companies issue predominantly in order to raise the funds. It is basically a medium cum strategy to raise additional funds from the existing shareholders of the company. XX Chemical’s directors are intending to raise the financial capital required for the project through the issuance of right shares for the external stakeholders. In order to accomplish the same, the company first has to register itself in the listed primary market and then move towards the secondary financial market. Financial markets, which have been categorizes as primary market and secondary market have two different aspects from the viewpoint of a country. A new company, which only has funds capital in its treasury, has to approach the primary market first merely for the capital. XX Chemical is basically a newly established company with a major aim to flourish in the Chemical Industry (Borodovsky & Gogarten, 2010). It is also suppose that the company has already issued some of its shares in the financial markets in order to raise the financial capital. Right issues basically works as a bonus for the shareholders, issued by the companies in order to satisfy the needs of the external stakeholders of the company (Borodovsky & Gogarten, 2010). The strategy to issue right share for the XX chemical will certainly benefited the company as far as raising additional funds for the project is concerned. Issuance of right issues would...

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