Toufeeq Brothers is a large manufacturing firm in Faisalabad that was created about 35 years ago by Mr Haji Muhammad Toufeeq. It was initially financed by with an equity investment by the Toufeeq family and 10 others individuals. Over time, Toufeeq family has obtained substantial loans from finance companies and commercial banks.The interest rate on the loan is tied to market interest rate and adjusted every six months. Thus, Toufeeq Brothers cost of borrowing is sensitive to interest rate movements. It has a credit line with the bank for obtain of funds on urgent basis. It had purchased Treasury securities that it could sell if it faces any liquidation problems.

It has assets valued at $10m and generates sales of $20m per year. Some of its growth is attributed to its acquisition of other firms. Toufeeq Brothers hopes to do so i.e. expansion by acquiring other businesses. Its expects that it needs substantial long term financing and plans to borrow additional funds by loans or by bonds. It is also considering issuing of stocks to raise funds in the next year. Toufeeq Brothers monitors conditions in the financial markets that could affect its cash inflow and cash outflow and ultimately affects its values.

Question: How might Toufeeq Brothers use primary market to facilitate its expansion &

If financial markets were perfect how might this have allowed Toufeeq Brothers to avoid financial institution.

Answer rating: 100% (QA)

Toufeeq Brothers and the Primary Market Expansion through the Primary Market Toufeeq Brothers can utilize the primary market for its expansion plans i... View the full answer