Com 56 corporate finance corporate nancing and

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Unformatted text preview: Ordinary shareholders: - Are the owners of the business Have limited liability Hold an equity interest or residual claim on cash flows Have voting rights Download free ebooks at bookboon.com 56 Corporate Finance Corporate financing and valuation Preferred shareholders: - Shares that take priority over ordinary shares in regards to dividends Right to specified dividends Have characteristics of both debt (fixed dividend) and equity (no final repayment date) Have no voting privileges 8.3 Debt policy The firm's debt policy is the firm's choice of mix of debt and equity financing, which is referred to as the firm's capital structure. The prior section highlighted that this choice is not just a simple choice between to financing sources: debt or equity. There exists several forms of debt (accounts payable, bank debt, commercial paper, corporate bonds, etc.) and two forms of equity (common and preferred), not to mention hybrids. However, for simplicity capital structure theory deals with which combin...
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This note was uploaded on 10/26/2012 for the course 19 19 taught by Professor - during the Spring '12 term at Sunway University College.

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