chapter

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Chapter

18Condensed

Financial Management

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Sources of Funds&

Financing

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Sources of Funds

1. Debt Capital

2. Equity Capital

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Types of Financing

1. Short-Term

2. Long-Term

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Short-Term Financing

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Sources of FundsShort-Term

• Trade Credit– 2/10, net 30

• Promissory Notes

• Family/Friends• Banks, etc.

– Secured Loan– Unsecured Loan

• Factoring• Commercial

Paper

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Different Forms of Bank Loans

• Secured Loans (collateral)– Pledging (accts receivable)– Inventory Financing (raw materials)

• Unsecured Loans• Line of Credit (not guaranteed)

– Revolving Line of Credit (guaranteed)• Comm’l Finance Companies

– Non-banks

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Long-Term Financing

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Sources of FundsLong-Term

• Debt– Term-Loan– Bonds

• Secured• Unsecured

• Equity– Stock– Retained

Earnings– Venture Capital

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Long-Term Debt Financing

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Term Loans

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BondsClasses

¢Unsecured¢Debenture

¢Secured¢Mortgage

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Long-TermEquity Financing

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Sources of Equity Financing

Equity Capital

Internal Sources

External Sources

Retained Earnings

Owner Contribution

sSale of Partnerships

Venture Capital

Public Sale of Stock