The Directors of Fairfield Ltd. should raise finance from various alternative sources. It should not raise finance only from a particular source. Director’s should secure additional funding for the development of new product line i.e. energy soft drink by issuing of debentures, as it will not lead to sharing of powers and only a fixed rate of interest have to be paid. Director’s can also raise funds for expansion from Venture Capitalists as the company have sound financial statements (Coe, 2011). Another source of raising finance can be UK stock exchange as Fairfield Ltd. has decided in advance. It can also raise additional finance from another company, which has an offer of providing sum of £3,000,000 at an interest rate of 8% per annum.
Raising finance from various sources will diversify the risk for the Fairfield Ltd. As the firm is showing profitability, but increasing of director’s pay with 15% is not feasible for next financial year 2016. Because company will go to raise finance from various sources, so it has to manage that accordingly and increase in director’ pay will bring extra burden for the company (Bizstats, 2016). So Fairfield Ltd. can increase director’s pay up to 6%.
Fairfield Ltd. should raise finance from various alternative sources. It should not raise finance only from a particular source. Raising finance from various sources will diversify the risk for the Fairfield Ltd.