blank Chapter 10 Notes

blank Chapter 10 Notes - Chapter 10: Getting Funding or...

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Chapter 10: Getting Funding or Financing I. Why the Need for Funding : 1. Cash Flow Challenges – inventory must be purchased, employees trained and paid, and advertising must be paid for before sales generate cash 2. Capital Investments – the cost of buying real estate, building facilities & equipment typically exceeds a firm’s ability to provide funds for these needs on its own. 3. Lengthy Product Development Cycles – the upfront costs of product development often exceeds a firm’s ability to fund these activities on its own. II. Sources of Personal Finance: 1. Founders – personal savings, mortgages, credit cards, etc. 2. Friends and family – gifts, loans or investments (also, delayed compensation or reduced or free rent) 3. Bootstrapping – the use of creativity, ingenuity, and any means possible to obtain resources other than borrowing money or raising capital from traditional sources. III.Preparing to Raise Debt or Equity Financing: Three Steps Involved: Step: 1. 2. Identify the most appropriate type of ____________ or ____________. a. ________________ – means exchanging partial ownership in a firm, usually in the form of stock, for funding. b.
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blank Chapter 10 Notes - Chapter 10: Getting Funding or...

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