Finance_3000

There are to many different ways to finance a company:

The first financing way is the loan, where a bank lend an amount of money to the borrower accepting the bank conditions at the moment, wich is a great advantage. The borrower has to return back the money in a period of time but with higher interests rates.

Secondly,Self-financing companies can raise their funds issuing stocks making a flotation. So once you are a stockholder you can take part on mettings where the shareholder can take decissions in the Anual General Stockholders, and if they have lots of stocks they could be in the board of directors. This could be a disadvantage because maybe the directors don´t want them to take part in such as important decissions. The objectives of a stockholders are having profits by increasing the stock price, also to take dividends depending on the amount of benefits the company has. Also the owners can re-buy stocks to have the control.

Another important financing way is the bonds issue. The principal disadvantage is that the company becomes debtor so it has to pay interest rates to bondholders. The advantages are that you obtain cash instantly so the company can afford their projects and also that the owners don´t loose the control of the company. Another positive point for the issuer company is that if the company is solvent and has got a correct management the rating agencies could consider the company's bonds as a non-risk investment for the bondholder, giving an investment grade rating as a AAA could be. We should remark the importance about the rating due to the particular situation in which the market is involved nowadays. So, if a company has got a nice rating that will provide, very probably, new people interested in their bonds, which means more finantial resources and an increasement of its development as well.

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