2.1. Overview - Financing Flashcards
What are the Criteria for Systematizing Financing Forms?
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2.
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4.
- financing occasion
- capital transfer period
- source of funds
- legal status of the investor
Types | Financing Occasion
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- start-up financing
- growth financing
- financing in the maturity phase
- refinancing
- reorganization financing
- project financing
Types | Capital transfer Period
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- short term (up to 1 year)
- medium term (1 to 5 years)
- long-term (5 or more years)
Types | Source of funds
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- external funding
- internal funding
Legal Status of the investor | Types
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- equity financing
- debt financing
- hybrid financing
What are the two types of Financial Instruments and their undertypes?
- (a. b. c.)
- (d. e.)
- external financing | equity capital (Equity financing) | hybrid capital (mezzanine financing) | borrowed capital (loan financing)
- internal financing | financing from sales revenues | financing from asset restructuring
Equity Capital | Types
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Shareholder contributions (partnerships) and new share issue (corporations)
Hybrid Capital | Types
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- subordinated loans
- convertible bonds
- profit participation rights
Borrowed Capital | Types
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- bank loans
- bonds
- leasing
- supplier credits
- factoring
Types of Financing from sales revenues
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- retention of profits
- financing via depreciation
- financing vio provisioning
Types of Financing from asset restructuring
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- working capital management
- divestments
- sale-and-lease back
Equity vs Debt | Differentiation Criteria
- legal status
- company management
- time availability
- E: liable either unlimited or limited to amount of capital contribution; subordinated claim in the event of insolvency || D: no lisbility, priority claim vis-a-vis owners in the event of insolvency
- E: managment right || D: no right to manage
- E: Indefinite term || D. limited term
Equity vs Debt | Differentiation Criteria #2
- profit shring and financing costs
- tax implications
- strain on liquidity
- E: participation in profit or loss || D: fixed interest claim, no profit participation
- E: profit to be taxed before distributed to equity investors || D: tax relief through interest payments
- E: distribution only if profit is generated || D: non-profit (fixed) interest payments
Debt (3) vs Liabilities (2)
Liabilities:
- a firms obligations to its creditors
- part of the right-hand side of the balance sheet
Debt:
- type of liability
- borrowed money often for the purpose of financing large purchases
- e.g. bank loans, bonds
