Business Financing And The Capital Structure

Finance. In order to finance our startup year, we issued stocks and borrowed loan to finance our operation and for safety in case the sales did not go well. Financing using stocks means that we are selling common or preferred stocks to individuals. In return for the money, they get some ownership over the company and its interest. This helps to bring public’s awareness about the company. If the sales suffice, we will pay the debt in the second round.

Finding the perfect capital structure in terms of risk and reward can ensure a company meets shareholder expectations and protects a firm in times of recession. Capital structure refers to how a business puts its money to “work”. The two forms of capital structure are equity capital and debt capital. Both have their benefits and limitations. Striking that perfect balance between the two can mean the difference between thriving versus trying to survive.

In choosing a form of business organization for a new enterprise, impor­tant factors include the ability to raise capital.

the debt capital that Defenders Direct Inc. needs would be raised by an independent debt capital market. How this markets work is that they identify the new sources of capital and strategic investors. After they associate this investors with the right companies that requires the

In this essay I would like to elaborate on the investment analysis of two companies, open a space of possibilities in discourse and practices in order to determine which of the two companies to invest in. The essay will commence with a brief overview of the two companies that are being considered. The latter part of the essay will explain and critique the financial position of the two companies and also the strategy and structure of the organization. For this purpose different financial tools will be used. The conclusion will be description and reasons for the company chosen to invest.

As the organization grows, the agency will have to increase employees, create assistant management positions, marketing positions as well as other support staff and at that time if the capital is not available the agency will have to find additional capital to cover expansion expenses, or the agency will find other financing options in the area of government grants, economic stimulus grants, and business expansion

2. Once you have estimated the start-up needs for this business, determine the best financing

The business has been brought and expanded largely on finance in the form of bank loans, not much of the owners own capital has been invested in to the business.

Task 2: Assessing the sources available to the businesses (a critical analysis of short term, midterm and long term financing)

During this essay I 'll be examining how and where to access sources of finance for a business, and the skill set used analysing financial information for decision making.

Businesses to grow and function need financial means. These means are defined sources of funding, which can be internal and external. The internal financing sources: include happen precisely also said venture capital and relate to the profit earned by the company management that the entrepreneur and the members who choose to leave the profit invested in the company. The External Financing Sources: include the debt capital that is obtained from commercial lenders to the company such as banks, suppliers.

How can cash be raised for the required investments? This is known as the ‘financing decision ' (cost of capital, capital structure and leasing).

Financing is needed to start a business and to increase the businesses profitability. There are several sources to consider when looking for start-up financing. The financial needs of a business will vary according to the type and size of the business. For example, processing businesses are usually capital intensive, large amounts of capital. Retail businesses and small businesses usually require less capital. Requiring.

The capital structure of a company refers to the mixture of equity and debt finance used by the company to finance its assets. Capital structure is the proportion of firm’s value financed with debt. Debt comes in the form of bond issues or long-term notes payable, while equity is classified as common stock, preferred stock or retained earnings.Short-term debt such as working capital requirements is also considered to be part of the capital structure. Some companies could be all-equity-financed and have no debt at all, whilst others could have low levels of equity and high levels of debt. The decision on what mixture of equity and debt capital to have is called the

Debt is the money which borrowed from a lender and pay interest on the investment. Equity is the stocks and shares which the company owned now and can be used to convert to cash as a financial investment. Sources of investment which are available for the small and medium sized companies are number of ways and companies need to choose them depend on the nature of the business. Berger, A., and G. Udell (1995) have found that it can be simply classified into two forms of supply money for SMEs which are internal resources and external credit. The internal resources include, retained earnings, current assets, fixed assets and the initial owner financing. Among them the easier one is the retained earnings, as they are liquid assets. This always happens in a small business which not uses this part of money to pay out to the owners but reinvest it into the company. Current assets and fixed assets are the capitals which owned by the company itself but these two kinds of assets have its different chrematistics. Compared to the fixed assets, the current assets can be directly invested into the company because it is consists of only cash or anything that doesn’t waste a long time to be converted into cash.