5 - Financing Decisions Flashcards
What is Debt Factoring?
Normally used by smaller organisations to help finance their working capital requirements
What is Equity Finance?
The Ordinary Shares in a business
What is the book value of Equity?
Ordinary Shares plus Retained earnings
What is the Market Value of Equity?
Share Price x The Number of shares
What are loan stocks (debentures)
Usually fixed interest rate borrowings with a set repayment date
In this exam treat preference shares as…
Debt
What is the Dividend pay-out ratio
Dividend / Earnings after tax AND preference dividends
What is an IPO
An Initial public offering, when a company is first listed on the stock exchange
What is underwriting?
In exchange for a fixed fee, usually 1-2% of the total finance to be raised, an institution or group of them, will undertake to purchase any securities not subscribed for by the public
Like insurance
What is the dividend yield?
Dividend per share / Market price per share * 100
What is the earnings per share ratio?
# of ordinary shares issued
What is the price-earnings ratio?
Market Price Per Share / EPS (earnings per share)
What is Venture Capital?
Risk baring capital provided in return for an equity stake in a business (aiming for growth potential)
What is Green Financing?
Investments in Environment Goods and services
Schemes that encourage sustainability
Green Loan Principals (specific and clear)
What is weak form efficiency?
Share price reflects past price movements
follow a random walk, and future movements cannot be predicted
