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What finance options are open to a fast growing UK Listed Maritime Company that is looking to expand? - Assignment Example
Author : uhomenick
Finance & Accounting
Pages 8 (2008 words)
Listed companies refer to companies which equity is recognized by a stock exchange such as the London Stock Exchange. Listed companies usually bear a value placed on their equity as their shares are traded through the exchange system. …
The market failure may arise from imperfect information fuelled by volatile economic conditions where lenders become risk averse. #1 Critical evaluation of the difference between debt and equity from the perspective of a UK listed company Listed companies have a broad range of financing options available to them, which include debt and equity (Graham and Smart, 2009, p. 44). Companies utilize a blend of debt and equity funding to finance their operations. Companies bearing high credit ratings can borrow money at low interest, besides selling shares at a premium. Debt refers to money raised from banks and bondholders, while equity refers to money raised from the shareholders. In return for investing their money in a company, shareholders are rewarded with a percentage of the company (a share). Equity financing refers to issuing additional shares of common stock to investors. The issuing of common stock decreases the previous stockholders’ percentage of ownership. Debt financing is often accompanied by strict conditions or covenants, besides having to pay interest and principal on stipulated dates. Debt Sources of Financing Debt financing incorporates collateralized bonds, leases, bank overdrafts, debentures, lines of credit, and bank loans. ...