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What is long term and medium term debt financing?

Aug 23, 2006 by john_medina24 | Posted in Other - Business & Finance

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Compare and contrast long term debt and equity financing?

Oct 25, 2007 by N/A | Posted in Investing

Long term debt is riskier at start up as there will be a definite cost through interest payments while equity is selling part of the business so you wont have the same costs of interest. In the long run however, if the business is successful then debt would end up being a cheaper way to finance as a successful company will have its shares rise in value so your opportunity to get the full amount of this gain would be lowered by what you sold. Equity financing also has the added benefit of more owners who may have specialized knowledge and skills and would be willing to provide that skill as they hope for the business to be a success.

Does anyone know how to get a term sheet for a few million of debt financing?

Jul 17, 2007 by indo19999 | Posted in Corporations

My company is looking to get the best deal possible

For this much money you're not going to find a standard rate. You'll have to talk to each lessor individually for them to evaluate your company and come up with the terms.

Can anyone explain on what is debt financing?

Apr 12, 2008 by ladywaney | Posted in Other - Business & Finance

Long term finance is divided into two types of finance which is the equity financing and debt financing.

Business debt financing solutions ?

Sep 16, 2008 by Al C | Posted in Small Business

Scott Equipment Organization is investigating the use of various combinations of short-term and long-term debt in financing its assets. Assume that the organization has decided to employ $30 million in current assets, along with $35 million in fixed assets, in its operations next year. Given the level of current assets, anticipated sales and Earnings Before Interest and Taxes (EBIT) for next year are $60 million and $6 million, respectively. The organization’s income tax rate is 40%; Stockholders’ equity will be used to finance $40 million of its assets, with the remainder being financed by short-term and long-term debt. Scott’s is considering implementing one of the following financing policies:
Amount of Short-Term Debt
Financial Policy In mil.LTD (%)STD (%)
Aggressive
(large amount of short-term debt) $248.55.5
Moderate
(moderate amount of short-term debt) $188.05.0
Conservative
(small amount of short-term debt) $127.54.5

a.Determine the following for each of the financing policies:
1)Expected rate of return on stockholders’ equity
2)Net working capital position
3)Current ratio

no

which long term debt instrument has the longest period of time for alternative financing?

Jul 04, 2008 by Leny P | Posted in Personal Finance

select one
1.taxable bonds
2.tax exempt bonds
3.FHA insured mortgage
4.Conventional mortgage

3!!!

what is the current bank rates for corporate bank loans and long term debt such as a bond?

Jul 28, 2006 by nikki | Posted in Other - Business & Finance

I am working on a class assignment and am trying to finance a plan of a joint venture between 2 companies and need the going rate on short term debt like a bank loan and long term debt such as a bond or bank loan also.

if someone wants to get out of debt today it is pretty easy with a debt consolidation plan
however it may get a bit tricky at times, I suggest you get as much information as possible online on this first,

a good place to start in my humble opinion is:

http://umgarticles.atspace.com/debt-consolidation.htm

Two different financing Plans (HELP PLEASE)

Aug 07, 2008 by Gavin's_Mommy | Posted in Investing

Emco Products has a present capital structure consisting only of common stock (10 million shares). The company is undecided between the following two financing plans (assume a 40 percent marginal tax rate):
Plan 1 (Equity Financing) Under this plan, and additional 5 million shares of common stock will be sold at $10 each.
Plan 2 (Debt Financing) Under this plan, $50 million of 10 percent long-term debt will be sold.
One peice of inforamtion the comapny desires for its decision analysis is an EBIT-EPS analysis.
A. Calculate the EBIT-EPS indifference point.
B. Graphically determine the EBIT-EPS indifference point.
Hint: Use EBIT = $10 million and $25 milion
C. What happens to the indifference point if the interest rate on debt increases and the common stock sales price remains constant?
D. What happens to the indifference point if the interest rate on debt remains constant and the common stock sales price increases?

Kristen: At some point you should be able to use the information in answers from your previous questions to figure out some of these new questions. Else I think we may be doing a tremendous injustice to your ability to learn by solving these problems for you. Nevertheless, here goes:

A. EPS(A) = EPS(B)
(EBIT - I(A))*(1-t)/N(A) = (EBIT - I(B))*(1-t)/N(B)
(EBIT - 0)*(1-0.4)/15 = (EBIT-(0.1*50))*(1-0.4)/10
0.04*EBIT = 0.06*EBIT - 0.3
EBIT = 0.3/0.02 = $15m

B. Cannot be done here - but use the EBIT/EPS equation to solve for EPS using two different values for EBIT ($10m & $25m) for the two plans. You will see that the Plan A and Plan B will intersect at EBIT = $15m

C. & D.) Both these can be solved by observing the equivalency form question A or solving the equations using excel.

In case of question C.: As the interest rate increases, the EPS in Plan B will decrease because more of the EBIT will go towards satisfying the increased interest requirements. Hence the EBIT (i.e. the indifference point) will have to increase to meet the new interest requirements. As an example, if interest rate increases, the new EBIT (indifference point) would be $18m which translates to a EPS of $0.72 in both Plan A and Plan B. (Use the equation in Question A to solve for this scenario)

In case of question D: As the common stock sale price increases, the no. of shares to be sold to raise $50m will decrease. This would mean a higher EPS no. for the Plan A if the EBIT remains constant. Hence again the EBIT in this case has to increase if the Plan B has to be equally as profitable as Plan A.

difference between investing and financing?

Oct 19, 2008 by jello | Posted in Investing

hey,
so im going over some questions in my text book, and i understand what they both mean. investing means buying something and using it to generate more money for the company. financing is borrowing money for the finanaces of the business.

in school we had some questions and we had to deicded which problems were finance, and which were investing and whether it increases cash, or decreases cash.

I lost 3 out of 10 marks because i simply got it wrong, but when i was looking over it i just didnt understand the logic behind. it would be graet if someone can explain to me why:

issuance of long term debt is financing (get this part) and why it INCREASES cash?

repurchase of shares is financing and it decreases shares?

Good grief. Where do all these clowns come from?

Anyway, to answer your question, investing is taking a reasonable amount of risk in order to get a return on capital.

Financing is borrowing money.

Companies repurchase shares to drive their stock price up and to have less shares on the market.

Two financing plans (Please Help)

Aug 06, 2008 by Gavin's_Mommy | Posted in Credit

Emco Products has a present capital structure consisting only of common stock (10 million shares). The company is undecided between the following two financing plans (assume a 40 percent marginal tax rate):
Plan 1 (Equity Financing) Under this plan, and additional 5 million shares of common stock will be sold at $10 each.
Plan 2 (Debt Financing) Under this plan, $50 million of 10 percent long-term debt will be sold.
One peice of inforamtion the comapny desires for its decision analysis is an EBIT-EPS analysis.
A. Calculate the EBIT-EPS indifference point.
B. Graphically determine the EBIT-EPS indifference point.
Hint: Use EBIT = $10 million and $25 milion
C. What happens to the indifference point if the interest rate on debt increases and the common stock sales price remains constant?
D. What happens to the indifference point if the interest rate on debt remains constant and the common stock sales price increases?

For question C, the indifference point shifts towards going with Plan 1, equity financing because the debt just became more expensive.

For question D, the indifference point once again shifts towards going with Plan 1 because the Equity just got cheaper (to raise 50 million would take issuing less shares if the stock goes up).

It's tough to answer anything graphically on here, so you might want to provide more info or rephrase that first part of the question. Good Luck!