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Copyright © 2007 South-Western. All rights reserved.
Financing
2
Learning Objectives
Financing
Remedies Equity
Composition Securities
Other Methods
Debt
Copyright © 2007 South-Western. All rights reserved.
Financing
3
The Key Decisions in Running a Business
Copyright © 2007 South-Western. All rights reserved.
Financing
4
Debt Financing
DebtEquitySecuritiesOther MethodsCompositionRemedies
Interest
Capital
Collateral
Loan Rate
Copyright © 2007 South-Western. All rights reserved.
Financing
5
Fixed versus Floating Rates
DebtEquitySecuritiesOther MethodsCompositionRemedies
Copyright © 2007 South-Western. All rights reserved.
Financing
6
Types of Loans
DebtEquitySecuritiesOther MethodsCompositionRemedies
Ongoing Operations
Term Loan
Line of Credit
SBA 7(a)
Copyright © 2007 South-Western. All rights reserved.
Financing
7
Bonds
DebtEquitySecuritiesOther MethodsCompositionRemedies
Indenture
Secured Bonds
Unsecured Bonds
Protective Covenants
Copyright © 2007 South-Western. All rights reserved.
Financing
8
Commercial Paper
DebtEquitySecuritiesOther MethodsCompositionRemedies
Commercial Paper
Short Term
Interest Rates
$1 Million Multiples
Copyright © 2007 South-Western. All rights reserved.
Financing
9
Common Creditors
DebtEquitySecuritiesOther MethodsCompositionRemedies
Commercial Banks
Savings Institutions
Finance Companies
Pension Funds
Insurance Companies
Copyright © 2007 South-Western. All rights reserved.
Financing
10
Equity Financing
DebtEquitySecuritiesOther MethodsCompositionRemedies
Retained Earnings
Dividend Policy
Copyright © 2007 South-Western. All rights reserved.
Financing
11
Stock
DebtEquitySecuritiesOther MethodsCompositionRemedies
Common Stock
Preferred Stock
Venture Capital
Copyright © 2007 South-Western. All rights reserved.
Financing
12
Public Firms
DebtEquitySecuritiesOther MethodsCompositionRemedies
IPO
Stock Mutual Funds
Secondary Market
Copyright © 2007 South-Western. All rights reserved.
Financing
13
Debt versus Equity
DebtEquitySecuritiesOther MethodsCompositionRemedies
Copyright © 2007 South-Western. All rights reserved.
Financing
14
Issuing Securities
DebtEquitySecuritiesOther MethodsCompositionRemedies
DistributionOriginationUnderwriting
Copyright © 2007 South-Western. All rights reserved.
Financing
15
Supplier Financing
DebtEquitySecuritiesOther MethodsCompositionRemedies
Copyright © 2007 South-Western. All rights reserved.
Financing
16
Leasing
DebtEquitySecuritiesOther MethodsCompositionRemedies
Full Control
Lease Period
Lease Payments
Copyright © 2007 South-Western. All rights reserved.
Financing
17
Capital Structure
DebtEquitySecuritiesOther MethodsCompositionRemedies Vs.
Debt Equity