- Objective of financing decisions.

- Interrelation between investment decisions and financing decisions.

- Main financial decisions

• The Balance is an accounting statement that reflects the situation of the company at a given time, it is what we call "Balance Sheet". This situation is summarized in four large groups:

1- Assets: what the company has in "property". Ex: Premises, machinery, licenses, money, etc.

2- Rights: what they owe the company. Ex: Accounts of clients pending collection.

3- Obligations: the debts of the company. Ex: loans ...

4- Equity: The capital (funds invested in the company by the partners), the reserves, the benefits not yet "distributed" ... less the losses (if any), is what we call Net Equity.

• The balance sheet reflects the status of these 4 groups at a date determined and ordered in two "parts":

(1) The ASSETS reflects what the company HAS (assets and rights).

(2) The LIABILITIES (Net Equity) reflects what the company MUST (obligations).

• The Net Equity reflects the "wealth" (capitalization) of the company through its capitals and its results or, what is the same, the difference between what He has (the asset) and what he owes (the liability). In short, the Balance Sheet:

1- Express the situation of the company on a specific date, assets and rights in the Asset, debts in the Liabilities, capital, reserves and results in Net Equity.

2- It is always expressed in monetary units.

3- The total of the Assets will always be equal to the Liabilities plus the Net Equity.

• The Asset is usually subdivided into:

1. NON-CURRENT ASSETS, also known as: REAL ESTATE or FIXED ASSETS. Assets and rights that will remain in the company in the long term (more than 1 year).

2. CURRENT ASSETS best known by CIRCULANTE: Goods and rights (which will become short-term money) and money. For the purpose of a better analysis, the currency is classified according to its degree of availability (ease of converting it into cash) into three groups:

2.1 Stocks

2.2 Realizable: rights (pending payments), their greater or lesser availability depends on the due date and the unpaid.

2.3 Available: money (and "liquid" assets), are the only really available assets.

• The second part of the Balance is subdivided into:

1 / NET EQUITY, also called: OWN RESOURCES, OWN FUNDS or NON-DEMANDABLE LIABILITIES.

It mainly includes: Capital, reserves and results.

2 / LIABILITIES, also referred to as FOREIGN RESOURCES OR DEMANDABLE LIABILITIES.

• In turn and based on its expiration (enforceability) it is ordered as:

2.1 Non-current liabilities also referred to as Long-term Demanding. They are debts for more than one year.

2.2 Current or Required short-term liabilities. They are debts less than a year.

The CURRENT ASSETS is the one that allows us to face the payment of the DEBT (Required).

It is important to compare the working capital with the Required in the short term and always try to maintain a reasonable margin (more circulating than required in the short term).

• The MANIOBRA FUND is what allows us to deal with "guarantees" to the payment of the debt. The easiest way to calculate it is: Current - Required short term.

The Maneuver Fund:

• It must always be positive (more circulating than required in the short term).

• It must be higher or lower depending on the availability of the working capital.

• It must be balanced in relation to the Required.

• The "margin" between Circulante and Exigible CP is the F.M.

• Basic principles to recommend:

.- The external resources should not exceed 70% of the total financing needed.

.- The remaining percentage should be supplied with own resources.

.- Subsidies should not be trusted as the main means of financing a new project.

.- An unforeseen amount should be reserved