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FINANCE 415

FINANCE 415. BUSINESS FINANCING DECISIONS. GO OVER SYLLABUS. OFFICE HOURS, ETC. COURSE PROCEDURES BASIC THRUST OF THE CLASS INSTITUTIONAL DETAIL THEORY APPLICATIONS ( CASES ETC.). THREE FOCAL ISSUES IN MANAGERIAL FINACE. KIND OF BUSINESS TO INVEST IN WHERE TO ACQUIRE NEEDED CAPITAL

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FINANCE 415

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  1. FINANCE 415 BUSINESS FINANCING DECISIONS

  2. GO OVER SYLLABUS • OFFICE HOURS, ETC. • COURSE PROCEDURES • BASIC THRUST OF THE CLASS • INSTITUTIONAL DETAIL • THEORY • APPLICATIONS ( CASES ETC.)

  3. THREE FOCAL ISSUES IN MANAGERIAL FINACE • KIND OF BUSINESS TO INVEST IN • WHERE TO ACQUIRE NEEDED CAPITAL • HOW TO MANAGE CASH FLOW

  4. FINANCING BUSINESSES • SELF FINANCING - 80% FOR ALL FIRMS. DIFFICULT FOR SMALL, GROWING FIRMS • EXTERNAL FINANCING • BORROWING FROM VARIOUS SOURCES • ISSUING PUBLIC DEBT INSTRUMENTS • ISSUING COMMON STOCK

  5. PREFERENCE RANKINGS • 1 -RETAINED EARNINGS -5.61 • 2 -STRAIGHT DEBT - 4.88 • 3 -CONVERTIBLE DEBT - 3.02 • 4 -EXTERNAL COMMON EQUITY - 2.42 • 5 -STRAIGHT PREFERRED - 2.22 • 6 -CONVERTIBLE PREFERRED - 1.72

  6. BALANCE SHEET IDENTITY • ASSETS • LIABILITIES • OWNERS’ EQUITY • [A = L + OE] FORMAT

  7. FOCUS ON CASH FLOW • LINKS INCOME STATEMENT AND BALANCE SHEET • HISTORICAL PERSPECTIVE • USE TO DISCUSS MANAGERIAL EFFECTS OF FINANCING DECISIONS

  8. SAMPLE OF MARKET CREATION • HABITAT FOR HUMANITY • USE NO-INTEREST MORTGAGES • ALWAYS CONSTRAINED FOR CASH • WHAT TO DO?

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