Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
FINANCE 301 – EXTENDED COURSE MODULE 5 CASE ASSIGNMENT DR. STEPHEN POLLARD For American Superconductor, availability of money is essential for any new venture. Funds are required to support all of the company’s activities to include payment of employees, new equipment, rent, etc. Finding the right financial mix is instrumental before investing in a project. It is important to examine the different types of financing to ensure the lowest cost of capital, flexibility of principal payments and enhancing operating cash flow. Some businesses choose debt financing as a mean to obtain a loan with a promise to repay the loan over a specific period of time along with interest. But there will be advantages and disadvantages that must be thought out. For American Superconductor, the advantage would be that the owner of the business keeps control of his company. Also, the interest of the debt is tax exempt. On the other hand, if the debt to equity ratio becomes extremely high it may be difficult to obtain more debt financing. Another possible disadvantage is a company can become overcommitted especially when cash is required to make interest and principal payments. Some advantages of equity financing are repayment of loans is not a grave concern
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/26/2011 for the course FIN 301 taught by Professor Dr.sopko during the Fall '11 term at Trident Technical College.

Page1 / 4


This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online