Sources of Funding

Overview/Description
 The successful operation of businesses depends on access to capital. Once a company has passed the start-up stage, current income and short-term loans must be used to meet financial needs. Other growth needs may require new infusions of equity capital or long-term debt financing. This course will introduce the most common sources of capital for businesses and the financial performance expectations of investors.

Target Audience
 Nonfinancial managers at all levels

Expected Duration
2.5 hours

Lesson Objectives:

Internal Sources of Funding

  • recognize the benefits of using internal funding sources.
  • identify the kinds of expenditures normally funded from operating revenues.
  • select the most appropriate explanation of how depreciation serves as a source of cash flow.
  • select the expected rate of return for retained earnings used as a funding source.

    • Stock Offerings

  • recognize the value of public stock offerings as a method of raising capital.
  • identify the key reasons for making a public stock offering.
  • select the major disadvantages of issuing new common stock shares.
  • discriminate between the major advantages and disadvantages of issuing preferred stock, from the company's perspective.

    • Borrowing in the Marketplace

  • recognize the benefits of issuing bonds to raise long-term capital.
  • identify the main purposes for issuing bonds.
  • match key factors with their influences on bond interest rates.
  • match types of bond interest rates with the advantages for the company.

    • Borrowing Short-term

  • recognize the benefits of borrowing from banks for appropriate capital requirements.
  • identify the common uses for bank financing.
  • select the main criteria bankers use when considering a loan for approval.
  • identify the usual features of commercial paper.

    • Course Number: FIN0145