Debt Financing Essays (Examples)

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Debt financing tends to have a lower cost than equity financing and is often easier to acquire. However, because debt financing represents a fixed obligation in terms of interest and repayment, it increases the risk of the firm. Thus, some amount of equity financing is ideal with respect to keeping the firm's risk level within reason. The level of risk a firm should have will vary depending on a number of variables. In some industries, cash flow is stable so more risk is reasonable; in other industries cash flow is unstable so lower risk is preferred.

Another consideration is control of the company. Because equity represents an ownership stake, firms often wish to control the amount of ownership stake that they surrender in their quest for financing. Debt financing is therefore sometimes preferable because it does not result in the surrendering of ownership stake. In some cases, preferred shares can be….


A third financing option is preference shares, one of whose principal qualitative advantages is no diminution management's interest in corporate growth or voting power (assuming that non-voting preferred stock issued). Also, any new equity sale requires the company to offer shares to preferred stockholders first to maintain their pro rata interest. This limits the flexibility to bring in new shareholders to influence operation systems. Meanwhile, preferred stock is always subject to the right to common stock conversion with its potential diminution of voting power and control. Likewise, 51-67% of preferred stockholders are required for sale, merger, liquidation, sale of shares with more privileges, issuance of debt over dollar amount, and increase in board size.

Midland Freight should be financed through long-term debt in conjunction with, the sale of $50 million in bonds. This debt alternative provides a $2 million tax shield, higher earnings per share and market price ratios, a lower….

Bankruptcy
Debt financing and bankruptcy

Bankruptcy: Chapter 11 versus other forms of bankruptcy

Thanks in part to concerns about childhood obesity, the low-carb diet craze, and changing consumer tastes, Interstate Bakeries Corp filed for Chapter 11 Bankruptcy in 2004. When the company did so, it was said that although the company was undergoing "reorganization and installed new management...it intended to survive. The company will continue operating its bakeries, outlet stores and distribution centers, and analysts said that its famous brands are unlikely to disappear from store shelves" (Twinkie and Wonder Bread maker files for bankruptcy, 2004, Katu). Hostess was one of Interstate's signature brands. The company showcases a wide range of products, although all fall into the same, relatively undiversified category of baked, sugary goods.

Upon reading that its products would still be offered in stores, consumers might be somewhat confused. How can a company go bankrupt, yet leave supplies of their beloved Twinkies….

.....debt and equity has a number of different implications, including some significant tax implications. Debt is repaid from earnings prior to taxation, where equity payouts typically occur on an after-tax basis. This is because debt repayments take priority over the payment of dividends or even to stock buybacks or retained earnings. Debt capital is thus repaid before the company is taxed -- debt lowers taxable income. Thus, debt will also lower the total tax burden that the company faces (FindLaw, 2017).
If the company opts for equity financing, it will face a higher tax burden. The taxable income will be higher, which means that the total tax payable will also be higher. Then, the equity that flows to shareholders will do so on an after-tax basis. The shareholders of course will also pay tax on whatever flows they receive. For the corporation, even though it doesn't pay that tax, it is….

Business Financing and the Capital Structure
Generally, businesses need to make several financial decisions that have significant direct effects on their operations and success in the increasingly competitive marketplace. However, there are numerous varying options that are available to businesses regardless of the types and sizes. The concept of business financing has emerged as an important aspect in the modern business environment because of the various financial decisions to be made by different firms. The main aim of this concept is to generate enough capital for the business to meet its existing needs in order to promote the growth of the business. In addition to generating capital for the growth of the business, business financing helps firms to meet the recurring financial obligations.

Use of Financial Planning in Estimating a Corporation's Asset Investment equirements:

Financial planning can be considered as a process that is used to approximate the financial requirements of the business….

Long-Term Debt
1st Student:

According to Cleverley, Song and Cleverley (2011), there are four options for health care organizations for finding long-term debt financing. These four options are tax-exempt revenue bonds, Federal Housing Administration (FHA)-insured mortgages, public taxable bonds and conventional mortgage financing. Tax-exempt revenue bonds are issued against the facility's revenue and these are a low-cost source of debt financing. FHA-insured mortgages need to be approved, which is a tricky process. The approval allows the hospital to have mortgage insurance that lowers the cost of borrowing for hospitals. Public taxable bonds are a typical corporate bond issued with an investment bank as underwriter to the public markets. Conventional mortgage financing often involves placing the mortgage with an investor, but the drawback is these usually cannot cover entire projects.

A health care firm can increase its equity in three ways. The first is through retained earnings, the second from contributions and the third….

SOX Impact on Corporate Financial Reporting
The Sarbanes-Oxley Act of 2002 (SOX) led to widespread changes in how governance, risk, compliance, financial reporting and decision-making are managed in publically-held coproratio9ns today. Experts in the field of governance and compliance have concluded that the SOX Act immediately redefined the scope of financial reporting and risk definition (Hagerty, 2006). This was especially prevalent in the bond markets, where forcing greater disclosure of financial performance and material events including Section 404 of the Act (Sarbanes-Oxley Act, 2002) led to more oversight of just how bond debt instruments were structured and implemented over time (oubakri, Ghouma, 2008). The net effect of the SOX Act continues to be seen today with positive and negatives changes to corporate financing taking place, and they are analyzed in the following section.

Positive and Negative Changes to Corporate Financing from the SOX Act

The SOX Act was deliberately written to be non-prescriptive….

GBATT Income Statement eview
GBATT has a relatively stable company. It saw revenues decline 4.4% and profits by 4.24% last year. Expenses dropped in lockstep with revenues, indicating that the company has good ability to respond to changes in the prevailing economy. The company still earned a healthy net margin of 12.6% last year, despite the apparent economic downturn.

There are several factors to consider when making the decision to enter the Brazilian market. If the decision to enter has already been made, then the company still has to consider the method of financing for the expansion. Debt better aligns the cash inflows incremental to the project with the outflows. However, debt may come with restrictive covenants, and furthermore depending on the method of debt financing the company might be exposed to different types of foreign exchange rate risk. Equity, on the other hand, comes at a higher cost than the cost….

Financing, and Marketing a Business
An idea for a business can come suddenly or after years of trying to identify a niche in which to market a product or idea. In either case, the process of starting and developing a business is often an arduous and complicated one that requires astute planning long before implementation. There is a difference between those who merely manage an already existing business and those who develop ideas and their own businesses and become entrepreneurs. Entrepreneurship is defined as "the process of identifying opportunities for which marketable needs exist and assuming the risk of creating an organization to satisfy them" (Hatten, 2012, p.24). Once and entrepreneur has established a need for a product or service there are several considerations that must be taken into account, including what type of business to establish and how to market the product to the world. Successful entrepreneurs are able….

" (Small-business financing: Debt vs. equity) Venture capital is a better route than an initial public offering for an early stage startup such as Active Reasoning that lacks the size and stability required for becoming a public company.
y taking on equity financing, the company's executives are well aware that they will be giving away partial ownership of the business in exchange for money and that this will have a significant impact on management's ability to make certain decisions (Equity financing). Even so, management considers debt financing too risky at this point in time when it is not certain if the company will have stable cash flows to make monthly debt payments. Management fears that high interest costs during difficult financial periods could potentially lead to insolvency (Debt vs. equity -- advantages and disadvantages) and does not need the tax write off for the interest on debt since it does not….

Finance Capital
Business Financing and the Capital Structure

In finance, capital structure is used to refer to the manner in which a corporation finances its assets through some mixture of equity, debt, or hybrid securities (Atrill & McLaney, 2011). A firm's capital structure is the configuration or structure of its long-term liabilities and each firm can choose a different configuration depending on its industry and/or its specific needs. Basically, a company has two choices in traditional capital financing.

The company can either sell equity, usually through the issuance of stocks or bonds, or it can sign a note with more of a traditional lender such as a bank in which a specific payment structure will be associated with the loan. Each manner of financing capital has different strengths and weakness that be relevant to a company depending on their circumstances and their goals. This analysis will briefly outline some of the advantages and….

Financing a New Business
PAGES 2 WORDS 779

Consultant, I starting a business developing business plan. I'm advice start forming business. I financed I partners. I interested learn intricacies options determine proceed plan.
Dear Mr. Owner:

Business financing is naturally one of the most important concerns of any individual beginning a new enterprise. In general, business owners have two available options: to seek out loans from a variety of available sources or to seek out equity financing from investors. There are advantages and disadvantages to both choices.

Many business owners first seek out loans from friends and family members. This has the advantage of a (usually) low interest rate: however, the cash supply is limited and owners do not always want to create bad blood between themselves and their relatives. Another option is seeking out loans from a bank. "To secure this loan, financial institutions will require several years of financial information on both the business and the entrepreneur. They….

Global Financing and Exchange ate Mechanisms
oles of International Financial Institutions: IMF, World Bank, and ADB

All international financial institutions have their different goals, objectives, varying expertise, and areas of specialization. This study will focus on the role African Development Bank, World Bank and International Monetary Fund on global finance. The partnerships enhanced are geared towards poverty reduction and economic growth that can be maintained. This is according to the recent announcements made by global financial institutions. The International Monetary Fund mainly focuses on promotion of international financial support and macroeconomic stability together with the growth of the member states.

On the other hand, the World Bank has diverted more attention on assisting member states to see a reduction of poverty levels by emphasizing on the development and social, structural, and institutional dimensions. Evidently, the reform for the financial sector is a key role promoted by international financial institutions. Collaboration will be very….

Higher Education
Existing Funding Infrastructure

Education financing in Florida is at a crisis point. The current system for K-12 financing in Florida features a combination of state and local funds. Approximately $7.75 billion is contributed by the state. This comes from general revenues, which puts this financing at risk should there be significant changes to state revenue levels. There have been stories in the news media in the past year where different bodies of expressed concern about the sustainability of Florida's ability to finance its K-12 system (Times-Union, 2012). The education system has seen its funding cut several times in recent years. As a result, the performance of Florida's schoolchildren has been poor.

At the state level, the Florida Education Finance Program (FEFP) is "the primary mechanism for funding the operating costs of Florida school districts (FLDOE, 2012). The formula on which Florida state financing is organized is based on FTE equivalency to….

S. is regulated by both state and federal regulations. Both the Securities Act of 1933 and the Securities and Exchange Commission Act of 1934 are federal laws that govern security issuing. he Security Act of 1933 requires that companies fully disclose information regarding their company as well as the security being issued to all potential investors (Megginson & Smart, 2009). he Security Act of 1993 called for the creation of the U.S. Securities and Exchange Commission (SEC) as well as defining what procedures are necessary for the public sale of securities and for the oversight of public companies. his includes the requirement of companies to file a disclosure form, which is referred to as a registration statement, with the SEC prior to beginning to solicit potential investors. Further, this form must be distributed to all potential investors. he SEC must approve the final registration statement before companies can execute sales….

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2 Pages
Essay

Economics

Debt & Equity Debt Financing

Words: 642
Length: 2 Pages
Type: Essay

Debt financing tends to have a lower cost than equity financing and is often easier to acquire. However, because debt financing represents a fixed obligation in terms of interest…

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2 Pages
Essay

Economics

Debt Financing That Confers a

Words: 561
Length: 2 Pages
Type: Essay

A third financing option is preference shares, one of whose principal qualitative advantages is no diminution management's interest in corporate growth or voting power (assuming that non-voting preferred stock…

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4 Pages
Case Study

Business

Debt Financing and Bankruptcy

Words: 1326
Length: 4 Pages
Type: Case Study

Bankruptcy Debt financing and bankruptcy Bankruptcy: Chapter 11 versus other forms of bankruptcy Thanks in part to concerns about childhood obesity, the low-carb diet craze, and changing consumer tastes, Interstate Bakeries Corp…

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2 Pages
Essay

Finance

debt versus equity for'start up

Words: 743
Length: 2 Pages
Type: Essay

.....debt and equity has a number of different implications, including some significant tax implications. Debt is repaid from earnings prior to taxation, where equity payouts typically occur on an…

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3 Pages
Term Paper

Economics

Business Financing and the Capital Structure

Words: 1191
Length: 3 Pages
Type: Term Paper

Business Financing and the Capital Structure Generally, businesses need to make several financial decisions that have significant direct effects on their operations and success in the increasingly competitive marketplace. However,…

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2 Pages
Essay

Economics

Long-Term Debt 1st Student According to Cleverley

Words: 458
Length: 2 Pages
Type: Essay

Long-Term Debt 1st Student: According to Cleverley, Song and Cleverley (2011), there are four options for health care organizations for finding long-term debt financing. These four options are tax-exempt revenue bonds,…

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3 Pages
Term Paper

Economics

SOX Act Slows Down Financing

Words: 921
Length: 3 Pages
Type: Term Paper

SOX Impact on Corporate Financial Reporting The Sarbanes-Oxley Act of 2002 (SOX) led to widespread changes in how governance, risk, compliance, financial reporting and decision-making are managed in publically-held coproratio9ns…

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3 Pages
Article Review

Finance

modes of financing and fx risk

Words: 1370
Length: 3 Pages
Type: Article Review

GBATT Income Statement eview GBATT has a relatively stable company. It saw revenues decline 4.4% and profits by 4.24% last year. Expenses dropped in lockstep with revenues, indicating that the…

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4 Pages
Research Paper

Business

Creating Financing and Marketing a Business

Words: 1287
Length: 4 Pages
Type: Research Paper

Financing, and Marketing a Business An idea for a business can come suddenly or after years of trying to identify a niche in which to market a product or…

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2 Pages
Research Proposal

Economics

Equity and Debt Active Reasoning

Words: 666
Length: 2 Pages
Type: Research Proposal

" (Small-business financing: Debt vs. equity) Venture capital is a better route than an initial public offering for an early stage startup such as Active Reasoning that lacks the…

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3 Pages
Research Paper

Economics

Business Financing and Capital Structure

Words: 755
Length: 3 Pages
Type: Research Paper

Finance Capital Business Financing and the Capital Structure In finance, capital structure is used to refer to the manner in which a corporation finances its assets through some mixture of equity,…

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2 Pages
Essay

Business

Financing a New Business

Words: 779
Length: 2 Pages
Type: Essay

Consultant, I starting a business developing business plan. I'm advice start forming business. I financed I partners. I interested learn intricacies options determine proceed plan. Dear Mr. Owner: Business financing…

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3 Pages
Term Paper

Economics

Global Financing and Exchange Rate Mechanisms

Words: 959
Length: 3 Pages
Type: Term Paper

Global Financing and Exchange ate Mechanisms oles of International Financial Institutions: IMF, World Bank, and ADB All international financial institutions have their different goals, objectives, varying expertise, and areas of specialization.…

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5 Pages
Essay

Economics

Higher Education Existing Funding Infrastructure Education Financing

Words: 1558
Length: 5 Pages
Type: Essay

Higher Education Existing Funding Infrastructure Education financing in Florida is at a crisis point. The current system for K-12 financing in Florida features a combination of state and local funds. Approximately…

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2 Pages
Case Study

Economics

Raising Long-Term Financing What Should

Words: 580
Length: 2 Pages
Type: Case Study

S. is regulated by both state and federal regulations. Both the Securities Act of 1933 and the Securities and Exchange Commission Act of 1934 are federal laws that govern…

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