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Report on Various Funding Sources - Dissertation Example
Author : cordiestreich
Finance & Accounting
Pages 12 (3012 words)
Report on Various Funding Sources Table of Contents 1. Executive Summary 3 II. Sourcing Funding for the Firm 4 III. Real-World Examples 13 IV. Glossary 14 V. Conclusion 15 VI. Referencing and Presentation 16 1. Executive Summary This report details the different funding options available to finance the ?…
The company has no debt and is equally divided in terms of ownership among five private individuals. Differing debt and equity funding opportunities present their own challenges, advantages, disadvantages, and sets of relationships, with equity financing offering greater flexibility on the surface and reduced impact to cash flows, but likewise compromised by its tendency to dilute control and to be of higher cost in the long term compared to debt financing. Debt financing, especially senior debt financing, offers the advantages of low costs in terms of lower interest rates, and of giving the borrowing company complete, unadulterated control of the company's destiny. On the other hand, debt financing impacts cash flow and hinders the company from using cash flow and profits to finance other projects. This is due to the payments that are required on a regular basis to service the debt. There is an opportunity for the firm to float shares in an initial public offering on markets outside of the UK, but this has to be explored in greater depth, given how any equity infusion dilutes ownership and control. ...