Financing with convertibles using convertible

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Unformatted text preview: ts. Financing with Convertibles Using convertible securities to raise long-term funds can help the firm achieve its cost-of-capital and capital structure goals. There also are a number of more specific motives and considerations involved in evaluating convertible financing. 10. For excellent discussions and demonstrations of the two methods of reporting EPS, see Donald A. Kieso, Jerry J. Weygandt, and Terry Warfield, Intermediate Accounting, 10th ed. (New York: John Wiley, 2001), pp. 147–149, 893–897. 686 PART 6 Special Topics in Managerial Finance Motives for Convertible Financing Hint Convertible securities are advantageous to both the issuer and the holder. The issuer does not have to give up immediate control as it would have to if it were issuing common stock. The holder of a convertible security has the possibility of a future speculative gain. Convertibles can be used for a variety of reasons. One popular motive is their use as a form of deferred common stock financing. When a convertible security is issued, both issuer and purchaser expect the security to be converted into common stock at some future point...
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This document was uploaded on 01/19/2014.

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