1Financial Management, Ninth Edition © I M Pandey Vikas Publishing House Pvt. Ltd. KITNE SOURCE HAIN ---------------

Slides:

Advertisements

Similar presentations

Trading on Equity The use of the fixed charges sources of funds such as debt and preference share capital along with the owner’s equity in the capital.

Advertisements

ACCOUNTING FOR COMPANY STATEMENT OF FINANCIAL POSITION (EQUITY)

Long Term Liabilities.  Capital Structure  Debt Financing - Bonds ◦ Interest is tax deductible  Equity Financing - Stocks ◦ Dividends paid is not tax.

Sources of Business Finance

Business Law and the Regulation of Business Chapter 35: Financial Structure of Corporations By Richard A. Mann & Barry S. Roberts.

Chapter Nine Corporate Financial Structure. Corporate Finances: Key Terms  Security: a share, participation, or other interest in property or an enterprise.

15 Dividend Policy ©2006 Thomson/South-Western. 2 Introduction This chapter examines the factors that influence a company’s choice of dividend policy.

, Prentice Hall, Inc. Ch. 8: Stock Valuation.

Stock Valuation 05/03/06. Differences between equity and debt Unlike bondholders and other credit holders, holders of equity capital are owners of the.

1 © 1999 by Robert F. Halsey Stockholders’ Equity In this section we will review: ¶ The nature of Stockholders’ Equity – The characteristics of the corporate.

Financing Choices 02/16/06. Corporate finance decisions revisited Corporate finance consists of three major decisions: Investment decision The financing.

Capital Structure 05/08/08 Ch Capital Structure – Balance Sheet Assets – Value of the Firm Listed by Closeness to Cash Current Assets Long-term.

Real Options and Long-Term Financing I C Corporate Finance Topics Summer 2006.

10-1 PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D., CPA.

1 Business Finance - DK 1 Cost of Capital - Definitions Capital structure - the mix of long-term financing sources such as debt, preferred shares, and.

- BY RAHUL JAIN Leverage and Capital Structure. 2Financial Management, Ninth Edition © I M Pandey Vikas Publishing House Pvt. Ltd. What’s the winning.

Equity Market in India  Equity Market is the market in which shares are issued and traded, either through exchanges or over the counter markets. Equity.

Long-Term Financing. Basics of Long-Term Financing.

Aswath Damodaran / Edited by Del Hawley1 Finding the Right Financing Mix: The Capital Structure Decision Aswath Damodaran Stern School of Business.

Chapter 25 Principles PrinciplesofCorporateFinance Ninth Edition The Many Different Kinds of Debt Slides by Matthew Will Copyright © 2008 by The McGraw-Hill.

Money doesn't create man but it is the man who created money. -Warren Buffet.

Stock (Equity) Preferred stock has preference over common stock in distribution of dividends and assets; dividend payments are fixed Preferred stock may.

Amity School Of Business Sources of Long Term Finance Module-1.

Obtain Finance. Types Finance Secured Finance – Finance is given in return for security over an asset – The security is a guarantee that lender has first.

Corporate Stocks by Mrs. Belen Apostol afinan1 1st sem

The Statement of Cash Flows Chapter 4 The Statement of Cash Flows Answers u u How Much Cash Was Provided by Operations u u What Amount of Property and.

Investing 101. Lesson Objectives Identify a security Calculate interest/ coupon/ dividend payments Identify different types of securities Describe the.

1 Long-term financing 長期融資 Source of corporate long-term financing: long-term debts preferred stocks common stocks.

Chapter 17 SOURCES OF LONG-TERM FINANCE  Centre for Financial Management, Bangalore.

1 Introduction to Company Accounting Learning Outcomes:  Understand the concepts and the environments associated with companies  Understand different.

Financial Assets (Instruments) Chapter 2 Requests for permission to make copies of any part of the work should be mailed to: Thomson/South-Western 5191.

INVESTMENT BANKING LESSON 12 APPLYING INVESTMENT BANKING TO FIXED INCOME Investment Banking (2 nd edition) Beijing Language and Culture University Press,

FIN 614: Financial Management Larry Schrenk, Instructor.

Chapter 8 The Valuation and Characteristics of Stock.

Slide 1 Stock Valuation Preferred Stock Features Valuation Expected return on a preferred stock Common Stock Characteristics Valuation – single and multiple.

Welcome to the Presentation

Chapter 18 Capital & Capital Market Financial Management  It deals with raising of finance, and using and allocating financial resources of a company.

Revise Lecture 9. Q1: What is capital market? Revise Lecture 9 Q2: What is primary and secondary markets?

Roti, Kapdaa Aur Makaan BUDGETING The Basic Framework of Budgeting A budget is a detailed quantitative plan for acquiring and using financial and other.

Intro to Financial Management Equities. Review Homework Types of bonds Bond risks Bond valuation.

LONG TERM FINANCE: SHARES, DEBENTURES AND TERM LOANS CHAPTER 20.

1 Introduction to Company Accounting Learning Outcomes:  Understand the concepts and the environments associated with companies  Understand different.

Ordinary shares. Ordinary shares represent ownership position as the shareholders are the legal owners of the company.

Statement of Changes in Financial Position. ACCOUNTING STANDARD- 3 CASH FLOW STATEMENT.

FINANCE IN A CANADIAN SETTING Sixth Canadian Edition Lusztig, Cleary, Schwab.

Equity Versus Debt Debt Equity Credit Card ST Credit Facility Bank Loan Bond SharesVenture Capital Business Angels Creditors get: Periodic interest payments.

Chapter 14 Dividend Policy © 2001 South-Western College Publishing.

VALUATION OF SHARES AND DEBENTURE. NEED OR PURPOSE  When two or more companies amalgamate or one company absorb another company.  When a company has.

Obtain Finance. Types Finance Secured Finance – Finance is given in return for security over an asset – The security is a guarantee that lender has first.

McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 10 Reporting and Interpreting Bonds. © 2004 The McGraw-Hill Companies McGraw-Hill/Irwin 10-2 Understanding the Business The mixture of debt and.

1Financial Management, Ninth Edition © I M Pandey Vikas Publishing House Pvt. Ltd. KITNE SOURCE HAIN

Long Term Finance: Shares, Debentures and Term Loans.

Chapter 2 – Introduction to Limited Company Financial Statements Accounting terminology Advantages of forming a limited company The Companies Acts / Governing.

F9 Financial Management. 2 Designed to give you the knowledge and application of: Section E: Business Finance E1. Sources of, and raising short-term finance.

Business Finance Finance is the study of funds management. The general areas of finance are business finance, personal finance (private finance), and public.

Financing. Equity financing Debt financing Equity financing: owned Stocks: Claims on assets Part ownership Common stock Preferred stock.

4-1 Business Finance (MGT 232) Lecture Stock Valuation.

Chapter 7 Cash Flow Statements.

Fixed-Income Securities: Characteristics and Valuation

Long term Finance Shares Debentures Term loans leasing

Financing a Business Two Sources of Cash Debt Equity Commercial Loans

Business Finance Chapter 28.

sources of short term and long term financing

Reporting and Interpreting Bonds

COST OF CAPITAL 1.

Chapter - 3 Valuation of Bonds and Shares. 2Financial Management, Ninth Edition © I M Pandey Vikas Publishing House Pvt. Ltd. Chapter Objectives Explain.

The Valuation and Characteristics of Stock

Accounting for Assets Cash Flows.

Presentation transcript:

1Financial Management, Ninth Edition © I M Pandey Vikas Publishing House Pvt. Ltd. KITNE SOURCE HAIN

Sources of Funds and Capital Structure

3Financial Management, Ninth Edition © I M Pandey Vikas Publishing House Pvt. Ltd. Ordinary Shares–Features Claim on Income Claim on Assets Right to Control Voting Rights Pre-Emptive Rights Limited Liability

4Financial Management, Ninth Edition © I M Pandey Vikas Publishing House Pvt. Ltd. Ordinary Shares–Pros and Cons Advantages 1. Permanent Capital 2. Borrowing Base 3. Dividend Payment Discretion Disadvantages 1. Cost 2. Risk 3. Earnings Dilution 4. Ownership Dilution

5Financial Management, Ninth Edition © I M Pandey Vikas Publishing House Pvt. Ltd. Right Shares – Pros and Cons Advantages 1. Control is maintained 2. Less flotation cost 3. Issue more likely to be successful Disadvantages 1. Shareholders lose if fail to exercise their right

6Financial Management, Ninth Edition © I M Pandey Vikas Publishing House Pvt. Ltd. Debentures–Features Interest Rate Maturity Redemption Sinking Fund Indenture Security Yield Claim on Assets and Income

7Financial Management, Ninth Edition © I M Pandey Vikas Publishing House Pvt. Ltd. Types of Debentures Non – Convertible Debentures Fully – Convertible Debentures Partly – Convertible Debentures

8Financial Management, Ninth Edition © I M Pandey Vikas Publishing House Pvt. Ltd. Debentures–Pros and Cons Advantages 1. Less Costly 2. No ownership Dilution 3. Fixed payment of interest Disadvantages 1. Obligatory Payment 2. Financial Risk 3. Cash outflows 4. Restricted Covenants

9Financial Management, Ninth Edition © I M Pandey Vikas Publishing House Pvt. Ltd. Term Loans–Features Maturity Direct Negotiations Security Restrictive Covenants 1. Asset related covenants 2. Liability related covenants 3. Cash flow related covenants 4. Control related covenants Convertibility Repayment Schedule

10Financial Management, Ninth Edition © I M Pandey Vikas Publishing House Pvt. Ltd. Preference Shares Similarity to Ordinary Shares: 1. Non payment of dividends does not force company to insolvency. 2. Dividends are not deductible for tax purposes. Similarity to Debentures: 1. Dividend rate is fixed. 2. Do not share in residual earnings. 3. Usually do not have voting rights.

11Financial Management, Ninth Edition © I M Pandey Vikas Publishing House Pvt. Ltd. Preference Shares–Features Claim on Income and Assets Redemption Sinking Fund Convertibility

12Financial Management, Ninth Edition © I M Pandey Vikas Publishing House Pvt. Ltd. Preference Shares–Pros and Cons Advantages 1. Risk less Leverage advantage 2. Dividend postponability 3. Fixed dividend 4. Limited Voting Rights Disadvantages 1. Non-deductibility of Dividends 2. Commitment to pay dividends

13Financial Management, Ninth Edition © I M Pandey Vikas Publishing House Pvt. Ltd. Assignment- II :Individual Submission On 12 th February 1. Page 442, Ch 20 Review Q1, 4,6 and 9 2. You have to choose a Public Ltd. Company and make a one/two page note on its Sources of Funds. (You have to give details on its equity, debt and preference shares- the amount, rate of interest, dividend paid (last year)) 3. Make a 1 page summary of the key leanings from the class

14Financial Management, Ninth Edition © I M Pandey Vikas Publishing House Pvt. Ltd. Note: Some important points Answers in A4 page – Hand written Individual submission Those who will not submit the assignment within 5 minutes of start of the class will be marked absent See the Assessment Plan on the intranet for other details Readings (Documents uploaded on intranet, Internet research, Library and Recommended Books)

15Financial Management, Ninth Edition © I M Pandey Vikas Publishing House Pvt. Ltd. Some important points Academic Honesty Individual Work Only, Allows for Group Discussion of Concepts and Problems Do Not Copy Work Reference Any Source When Confused Ask Instructor Contact me: Rahul Jain ( , Yahooid:rahulkjain16)