台湾大学An Overview of Corporate Financing Training.PPTVIP

Topics Covered Common Stock Preferred Stock Corporate Debt Convertible Securities Patterns of Corporate Financing Common Stock Common Stock Authorized Share Capital Maximum number of shares that the company is permitted to issue, as specified in the firm’s articles of incorporation. 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. Common Stock Example - H.J. Heinz Book Value vs. Market Value (4/99) Total Shares outstanding = 358 million Common Stock Example - H.J. Heinz Book Value vs. Market Value (4/99) Total Shares outstanding = 358 million Common Stock Example - No-name News can be established by investing $10 million in a printing press. The newspaper is expected to generate a cash flow of $2 million a year for 20 years. If the cost of capital is 10 percent, is the firm’s market or book value greater? Common Stock Example - No-name News Preferred Stock Preferred Stock - Stock that takes priority over common stock in regards to dividends. Net Worth - Book value of common shareholder’s equity plus preferred stock. Floating-Rate Preferred - Preferred stock paying dividends that vary with short term interest rates. Corporate Debt Debt has the unique feature of allowing the borrowers to walk away from their obligation to pay, in exchange for the assets of the company. “Default Risk” is the term used to describe the likelihood that a firm will walk away from its obligation, either voluntarily or involuntarily. “Bond Ratings”are issued on debt instruments to help investors assess the default risk of a firm. Corporate Debt Prime Rate - Benchmark interest rate charged by banks. Funded Debt - Debt with more than 1 year remaining to maturity. Si