FINANCE
-
Every company needs money in
order to survive and grow.
-
Financial managers must ensure
that the company’s earnings exceed its cost-the company must earn the profit.
-
For a proprietorship or
partnership, profits means an increase in its owners’ wealth. For a
corporation, profits signify an increase in the value of its common stock.
1. Why is
financing an important option for both personal and corporate use?
Financing is an
important option for both personal and corporate use because every company and
personal need money in order to survive and grow and money means financing.
2. What are some
examples of personal financing that you use in your life?
The examples of
personal financing that I use in my life are mortgages, student loans, saving
and checking accounts.
3. What are some
sources from which a company can acquire capital?
- Trade credit allows the buyer to
delay payment of the bill for the goods purchased.
For example, “2/10, net 30” means that you can deduct a 2 percent discount from the total bill if you pay
within ten days. If you don’t, the entire amount
is due by the thirteenth day.
- Companies also take out loans from
commercial banks. It is the borrower’s responsibility
to convince the lender that the money will be returned on time, with interest.
- Equity financing occurs when a
company issues and sells ownership in the company.
Earnings are paid to shareholders in the form of dividends. If there are no earnings to be shared, the firm can skip
dividend payments. There are two different
types of stock that a company sells, preferred stock and common stock. Preferred stock is sold with a
specific dividend rate. Before any earnings can be distributed to common stock shareholders, the preferred dividends
must be paid.
- Debt financing occurs when a
company raises capital by borrowing. The company
issues bonds, which are long-term notes that carry a specific interest rate and maturity date. Payments of interest
and the repayment of the loan are fixed legal
obligations. When these are due, the firm must pay.
4. What is the difference between short-term and
long-term financing?
Tidak ada komentar:
Posting Komentar