Final answer:
Balancing tactics are strategies used by firms to manage their financial resources and may include long-term borrowing and shifting funds. These tactics are part of broader financial decisions that firms make, which involve choosing between different sources of financial capital such as bank loans, bonds, or stock issues, each with its own implications.
Step-by-step explanation:
The question pertains to balancing tactics that firms may use to manage their finances. These tactics can include strategies such as using long-term capital borrowing to cover operating expenses, postponing expenditures into the next year, shifting funds between accounts, and presenting a financial plan where revenues may be overestimated and expenditures underestimated. These methods are generally employed to align financial resources with the firm's short-term and long-term financial goals.
Firms make decisions like buying machinery, building plants, or starting research and development projects with the expectation of future profits. To fund these initiatives, they can consider securing financial capital from various sources, including early-stage investors, reinvesting profits, borrowing through banks or bonds, and selling stock. When choosing how to access financial capital, firms need to consider the advantages and disadvantages associated with each option, particularly concerning control over the business and the obligation to make scheduled payments.