VENUS MONICA C.

CALUNGSOD In a Nutshell 2D
CEE 108 (6802)

To determine best source of financing. What are the six (6) consideration
recommended by Schull and Haley?

As there are several fund sources, the engineer manager or the one in control,
must decide which is the greatest option for the company. The following factors should
be examined while determining the best source, according to Schull and Haley. These
are flexibility, risk, income, control, timing, other factors like collateral values,
flotation costs, speed, and exposure.

Flexibility comes with some fund sources impose certain restrictions on the
activities of the borrowers. Risk refers to the chance that the company will be affected
adversely when a particular source of financing is chosen, when applied to the
determination of fund sources. Income refers to the various sources of funds, when
availed of, will have their individual effects in the net income of the engineering firm. When
the firm borrows, it must generate enough income to cover the cost of borrowing and still
be left with sufficient returns for the owners. Control is also important. The current group
of owners may lose control of the company if new owners are brought in due to a need
for additional finance. If the existing owners do not want this to happen, they will have to
look for alternative sources of funding. The financial market has its ups and downs. This
means that there are times when certain means financing provides better benefits than
at other times. In times like this engineer manager must, therefore, choose the best
timing for borrowing or selling equity. Aside from that, other factors like collateral values,
flotation costs, speed, and exposure are also considered in determining the best source.