This paper aims to explore the various long-term sources of financing, which specifically delves with one debt source—the bond offerings, and one equity source—the seasoned equity offerings. The discussion revolves around academic studies that are referenced from various…
If a company that has already undergone an IPO needs to raise substantial capital again and it chooses to issue new equity in order to finance it, this is called seasoned equity offering (Butler, Grullon & Wetson 2005). Seasoned equity offerings come in different variations as regards the terms of the offer such as offering the stocks at investors-at-large or through a rights offerings. Under the rights offering, the company can issue rights to the purchasing the new shares to recipient investors on a proportionate basis (Weller 1962). These rights can either be sold or utilised depending on the recipient investors (Weller 1962).
In 2008, Tesco Plc has seasoned equity offering that amounted to 130 million pounds; this is consist of 3 million pounds in issue capital, and 127 million pounds in share premium (Tesco Plc 2009). According to Tesco Plc, part of this seasoned equity offering is to issue shares as stock options are exercised. The rest of it is used for additional financing to the company. On the other hand, Marks & Spencer has issued 0.5 million pounds in equity (Marks & Spencer 2009). In contrast to Tesco Plc, this issue of shares by Marks & Spencer is due to exercise of options. However, seasoned equity offerings are used by the two companies in raising funds to finance their operations. One major advantage of this source of long-term funding is the huge amount of capital that large companies such as Tesco and Marks & Spencer have access in the form of the stock market. As regards the size of the capital raised, seasoned offerings in the stock market really provide huge advantages to these companies.
Seasoned equity offerings also have some shortcomings. For one, after an SEO, it is very usual that the stock price of the company gets lower because of the increase in price. There is a period of time before the price of the stocks will incorporate the information about the company, and this ...
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It also includes the suitability of each source of financing to different firms based on the kind of business stage the firm is in. The long-term finances for a firm are mainly of two types- Equity and Debt. Mainly four sources of long-term finances are discussed i.e.
Finance makes one of the fundamental requirements for establishment and good running of a business. Finance, however, may be acquired through different methods depending on its availability and the ease of repaying it. Financing means the provision of financial materials that a business requires.
This center further takes care of different kinds of patients who require either short term or long term medical and nursing supervision. In addition, this nursing home offers a specialized program that caters for patients suffering from Alzheimer and other illnesses on the basis of request to access care away from home.
short term financing or long term financing.
It is essentially to provide capital deficit business funs for a short term period of a year or less. It's also made to refer to the time for which a loan is required and the period over which its repayment is expected to take.
It is not desirable to use short term funds because of higher rate of interest and because of their limited availability. If the short term funds are diverted for long-term purposes, business will suffer for want of working capital required for inventory, bills receivable and operating expenses.
One of the most important questions that most of the people ask when they are starting any business venture or company is regarding financing. Debt financing and equity financing are the two obvious options. This