How to Use Balance Sheet to Fund the Project

To use balance sheet to fund the project means to use only balance sheet resources for completing any future project. Is it possible? Yes, it is possible and you can easily provide the resources through good balance sheet analysis. Following steps may be helpful for this.

1. To estimate the Need of Total Fund for Future Project

First of all you have to calculate the correct estimation of total need of fund for future project. You have to calculate all cost relating to the project.

2. To Analyze Current Balance Sheet 

Your next steps is to analyze the current balance sheet. You have to check which fund is not using in business. For example, you may be enough past reserves and surplus. All this fund may be in liquid form. You can use for your future fund. You may be big available share capital fund which is not being utilized in business. So, you can check it.

3. To Estimate the Future Balance Sheet 

You can estimate the future balance sheet on the basis of past balance sheet trends. For example, if there are big earning possibility in the future, your balance sheet's resources side will increase. You can use these resources. In future, your planning may be to convert loan into equity shares, at that time, you can save money from repayment.

4. Effective Utilization of Balance Sheet Assets

See your balance sheet assets, can you use it for your future projects. Yes, then it will be as the fund from balance sheet. For example, you are interested to buy new ambulance for your employees welfare. But when you have seen your vehicles, at that time, you found that you can use to vehicles as ambulance because their other uses are very minimum. So, this project will be said as funded from balance sheet.

Cape Town – Transnet’s new expanded capex programme will be funded entirely from the company's balance sheet.

Thanks Fin24 for giving me idea to write above content. Following is the quote of Fin24 content.

Brian Molefe, CEO of Transnet, was pleased that President Jacob Zuma put the parastatal at the centre of a massive new infrastruce development plan in his State of the Nation address on Thursday night.

Zuma announced that Transnet's capital expenditure will increase from R110bn over the next five years, to R300bn over the next seven.

“The money’s there,” Molefe told Fin24.

“Transnet’s performance is improving, we think we can do it and remain within the necessary gearing ratios.”







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Accounting Education: How to Use Balance Sheet to Fund the Project
How to Use Balance Sheet to Fund the Project
Accounting Education
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