Copyright © 2007 South-Western. All rights reserved. Chapter 16 Financing.

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Presentation transcript:

Copyright © 2007 South-Western. All rights reserved. Chapter 16 Financing

Copyright © 2007 South-Western. All rights reserved.1 Learning Objectives Financing RemediesEquity Composition Securities Other Methods Debt

Financing Copyright © 2007 South-Western. All rights reserved.2 The Key Decisions in Running a Business

Financing Copyright © 2007 South-Western. All rights reserved.3 Debt Financing Debt Equity Securities Other Methods Composition Remedies Interest Capital Collateral Loan Rate

Financing Copyright © 2007 South-Western. All rights reserved.4 Fixed versus Floating Rates Debt Equity Securities Other Methods Composition Remedies

Financing Copyright © 2007 South-Western. All rights reserved.5 Types of Loans Debt Equity Securities Other Methods Composition Remedies Ongoing Operations Term Loan Line of Credit SBA 7(a)

Financing Copyright © 2007 South-Western. All rights reserved.6 Bonds Debt Equity Securities Other Methods Composition Remedies Indenture Secured Bonds Unsecured Bonds Protective Covenants

Financing Copyright © 2007 South-Western. All rights reserved.7 Commercial Paper Debt Equity Securities Other Methods Composition Remedies Commercial Paper Short Term Interest Rates $1 Million Multiples

Financing Copyright © 2007 South-Western. All rights reserved.8 Common Creditors Debt Equity Securities Other Methods Composition Remedies Commercial Banks Savings Institutions Finance Companies Pension Funds Insurance Companies

Financing Copyright © 2007 South-Western. All rights reserved.9 Equity Financing Debt Equity Securities Other Methods Composition Remedies Retained Earnings Dividend Policy

Financing Copyright © 2007 South-Western. All rights reserved.10 Stock Debt Equity Securities Other Methods Composition Remedies Common Stock Preferred Stock Venture Capital

Financing Copyright © 2007 South-Western. All rights reserved.11 Public Firms Debt Equity Securities Other Methods Composition Remedies IPO Stock Mutual Funds Secondary Market

Financing Copyright © 2007 South-Western. All rights reserved.12 Debt versus Equity Debt Equity Securities Other Methods Composition Remedies

Financing Copyright © 2007 South-Western. All rights reserved.13 Issuing Securities Debt Equity Securities Other Methods Composition Remedies DistributionOriginationUnderwriting

Financing Copyright © 2007 South-Western. All rights reserved.14 Supplier Financing Debt Equity Securities Other Methods Composition Remedies

Financing Copyright © 2007 South-Western. All rights reserved.15 Leasing Debt Equity Securities Other Methods Composition Remedies Full Control Lease Period Lease Payments

Financing Copyright © 2007 South-Western. All rights reserved.16 Capital Structure Debt Equity Securities Other Methods Composition Remedies Vs. DebtEquity

Financing Copyright © 2007 South-Western. All rights reserved.17 Remedies for Debt Debt Equity Securities Other Methods Composition Remedies Formal Remedies Extension CompositionLiquidation Bankruptcy