Of equity financing and debt financing - corporate financing.doc

Abstract: The financing is not only a prerequisite for enterprise production and business activities, it is to ensure the smooth progress of corporate reproduction as well as foreign investment. Many financing companies, from reality, a reasonable choice in favor of financing their own development and effectively be combined to reduce financing costs and financing risks aim to achieve the best economic efficiency of enterprises. Paper Keywords: financing, equity financing, debt financing equity financing means that the way to issue shares to raise funds to pay dividends. (A) direct investment ⒈ definition: refers to investment investor in one economy in an enterprise in another economy made, and such long-term investment so that investors can effectively influence decisions about the management of the enterprise. Statistically, if the investor holds 10% or more of a business stake, it will be considered as long-term effective in influencing business decisions relating to the management of enterprises. Direct investment includes equity capital, reinvested earnings and other capital. Equity capital includes the share capital held by branches, subsidiaries and associates companys stock; reinvestment of undistributed income refers to the branch profits and investors from affiliated or associated companies should have but did not distribute dividends in the form of profits; other capital involved between long-term or short-term debt transactions, including loans between parent companies and their subsidiaries, associates and branches. Absorbing direct investment is an enterprise in accordance with the joint investment, co-operation, a total of risks, profit sharing principle to absorb the country, legal entities, individuals, foreign investors invested a financing. ⒉ applicability and conditions: For the financing side: ⑴ main requirements: the use of absorbing direct investment companies raise capital should be non-stock limited liability company. ⑵ need to ask: Cor