There Are Two Important Questions Financial Managers Should ✓ Solved

There Are Two Important Questions Financial Managers Should Askwhat L

There are two important questions financial managers should ask: What level of assets are needed to operate? How to finance those assets or raise capital? (The firm can use equity or debt financing or combination of both.) Select a publicly traded company (make sure your selected company is different than your classmates’) based in KSA and look (in terms of percentage) how it finances its operations using equity or debt financing. In addition, in Saudi Arabia Vision 2030 stated SMEs (Small-Medium Size Enterprises) struggles to access adequate funding from the financial institutions. Offer two recommendations how this struggle is addressed and be in alignment with Saudi Vision 2030. Search the SEU library or the Internet for an academic or industry-related article.

Select an article that relates to these concepts and explain how it relates to doing business in Saudi Arabia. For your discussion post, your first step is to summarize the article in two paragraphs, describing what you think are the most important points made by the authors (remember to use citations where appropriate). For the second step, include the reference listing with a hyperlink to the article. * Do not copy the article into your post and limit your summary to two paragraphs. Let your instructor know if you have any questions and enjoy your search.

Sample Paper For Above instruction

Introduction

This paper examines the financial strategies of Saudi Arabian companies with an emphasis on their methods of financing assets through equity and debt. It also explores challenges faced by SMEs in accessing funding within the context of Saudi Vision 2030 and provides recommendations to improve financing options aligned with national development goals. An academic article relevant to these topics is summarized to illustrate the current landscape and discuss implications for doing business in Saudi Arabia.

Analysis of a Saudi Company’s Financing Mix

A prominent publicly traded company in Saudi Arabia, Saudi Aramco, exemplifies the country’s operational financing strategies. According to the company’s latest financial statement, approximately 70% of its capital structure is financed through equity, primarily via retained earnings and government investments, while 30% is through debt instruments such as bonds and loans (Saudi Aramco, 2023). This heavy reliance on equity underscores the government’s strategic investment approach, aligning with Vision 2030’s goal of diversifying sources of revenue and fostering economic stability. The company’s balanced approach indicates a preference for maintaining financial flexibility and minimizing debt-related risks.

Challenges Faced by SMEs in Saudi Arabia

Small and Medium Enterprises (SMEs) in Saudi Arabia encounter significant hurdles in securing adequate funding, which hampers their growth and contribution to the economy. According to a report by the Saudi Central Bank (SAMA, 2022), access to finance remains limited due to high collateral requirements, stringent lending criteria, and a lack of tailored financial products for SMEs. These issues prevent many SMEs from expanding operations, creating a gap in employment opportunities and innovation. Addressing these challenges is critical for fulfilling Saudi Vision 2030’s objective of fostering a vibrant, diversified economy with a dynamic SME sector.

Recommendations to Improve SME Funding in Line with Saudi Vision 2030

Two key recommendations to mitigate SME funding challenges include: firstly, establishing dedicated SME financing programs through national development funds, which offer low-interest loans and credit guarantees to reduce borrowing risks. Secondly, encouraging the growth of alternative financing channels such as venture capital, crowdfunding, and fintech solutions can diversify funding sources and increase accessibility. These measures would align with Vision 2030’s ambition to support entrepreneurship, innovation, and private sector development, ultimately fostering a resilient SME ecosystem in Saudi Arabia.

Relevance of Industry Literature

An insightful article by Al-Hassan et al. (2021) discusses the financing landscape for SMEs in Saudi Arabia and highlights the importance of policy reforms and financial innovations in overcoming funding barriers. The authors emphasize that integrating fintech solutions can significantly enhance access to capital and streamline financial processes for SMEs. This relates directly to the current challenges discussed earlier and underscores the need for structural reforms to support SME growth in the Saudi context.

Conclusion

In conclusion, understanding the financing structures of Saudi companies and addressing SME funding challenges are vital components of doing business effectively in Saudi Arabia. Policies and innovations that promote diversified and accessible funding sources are essential for aligning with the goals of Saudi Vision 2030 and ensuring sustainable economic development.

References

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