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W1/DQ1 How do preliminary financial projections guide an organization’s funding assessments? How can a company prepare...

W1/DQ1

How do preliminary financial projections guide an organization’s funding assessments? How can a company prepare for the challenges they may face when attempting to raise capital?

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a) Preliminary financial projects are done to get an estimate on the future earnings of an organization. It represents the management's view on the likely performance of the business. The projected earnings gives an estimate on the cost analysis to support the required amount of earnings. The management gets an estimate on how much cost or capital it needs to generate the given amount of earnings from operations.

b) There are several challenges that a company can face while raising the capital. The banks or institutions before lending the money can hard bargain or negotiate to ask for greater interest rate or equity stake for lending a given amount of capital. The company can prepare for such hard negotiations by backing the earnings with substantial means like having the results Audited, lending collateral, showing historical results (if available).

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