Corporate Financing Chapter 14 (exam 2)

Corporate Financing Chapter 14 (exam 2) - Chapter 14 An...

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Chapter 14 An Overview of Corporate Financing
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Topics Covered Patterns of Corporate Financing Common Stock Debt Financial Markets and Institutions
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Patterns of Corporate Financing Firms may raise funds from external sources or plow back profits rather than distribute them to shareholders. Should a firm elect external financing, they may choose between debt or equity sources.
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Patterns of Corporate Financing
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59 . 843 , 6 490 , 2 578 , 1 assets Total Debt = + = 33 . 775 , 2 385 , 1 385 , 1 equity s liabilitie term Long s liabilitie term Long = + = + How do we define debt ? Patterns of Corporate Financing
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Debt Ratios Debt Ratio, % Debt to Net Worth for Non-Financial Firms, 1950-2008
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Common Stock Book Value vs. Market Value Book value is a backward looking measure. It tells us how much capital the firm has raised from shareholders in the past. It does not measure the value that shareholders place on those shares today. The market value of the firm is forward looking, it depends on the future dividends that shareholders expect to receive.
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Corporate Financing Chapter 14 (exam 2) - Chapter 14 An...

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