Balance Sheet Re-Organisation
This is an exercise where the business activities, historical
and forecast financials and business plan of a corporation are
examined.Against such examination and depending on the forecast
financial needs of the corporation, a scheme can be devised such
that the debt and equity component of the corporation can be adjusted
to render the overall cost of capital more efficient.
For instance, corporations which have a large component of short
term debt that does not match medium term cash inflow may to restructure
such debt through issuance of long dated quasi-debt instrument.
In addition, assets which yield low return on assets may be disposed
off to reduce the gearing position of the corporation under consideration.
Overall, balance sheet re-organisation seeks to transform the
balance sheet of a corporation to such position that better reflects
the cash inflow and outflow nature and trend of the business.
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