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Topic: Business
Number of pages / Number of words: 3 / 587
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This arise from a point of view of a department, cost centre or wholly owned subsidiary, the budgetary constraints determined by senior management or head office.

o Human Resource Limitations: Company does not have enough middle management to manage the new expansions

o Dilution: For example, there may be a reluctance to issue further equity by management fearful of losing control of the company...


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For example bondholders requiring in the bond contract, that they would accept a maximum Debt-to-Asset ratio = 40%.

Capital Rationing could be said to signal a managerial failure to convince suppliers of funds of the value of the available projects. Although there may be something in this argument, in practice it is not a well-informed judgement...


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