Unformatted text preview: s, at 2.4% coupon, to finance
repayment of outstanding $400 million notes at
almost 6%. These monies, in turn, were used to
back working capital and buyback equity;
In May 2011 LinkedIn had an IPO of $350
million, that it is using to develop the “Hiring
Solutions” product, to acquire other companies,
and to expand in Europe.
and Retained Earnings
The portion of after-tax net income of a corporation not
paid out to shareholders in the form of dividends, but
which instead is retained for use in the business.
Avoids the double tax penalty Disadvantages Hard and slow to accumulate
How do shareholders relate to it?
Crises are characterized by absence of earnings. Long term debt
Debt obligations issued by private or public companies
to raise funds for a variety of corporate purposes such
as building a new facility, purchasing equipment, or
expanding the business.
expanding Corporate bonds
Securitized, syndicated bank loans Advantages Cheaper than equity, because they are not taxed (and
interest is tax deductible)
Relatively easy to raise, multiple sources
Leverage Disadvantages Interest payments, to be made no matter what;
Credit worthiness an issue
Lenders frown on volatility. Why do companies take loans?
Supply side The normal transacting of business is made much easier by cred...
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