DPBS 1170
Capital Resources 1
Unit 6 Lecture: asynchronous and synchronous
General housekeeping:
• Please switch your microphone to mute to avoid disruption to the class
• Use the chat channel to ask questions or make a comment, or raise
your 'virtual' hand
• If you have poor internet, turn off your video, otherwise please turn on
your cameras
• Wait for your lecturer to start
Topics of Unit 6
Raising capital
• Identify
- Different types of capital resources within an organization
• Mobilise capital through various avenues of capital raising such as
- Venture capital/private equity
- Initial Public Offering (IPO)
- Seasoned equity offering (SEO) - Public vs. non public debt
- Trade Credit
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Environment
(e.g., legal, business trends, global environment)
Organisational Performance
Identify
Identify capital needs, evaluate possible sources of capital and set target capital structure.
Mobilize
Week 8
Measure
Monitor and quantify:
• Costs and benefits
• financial leverage
• financial risks
• debt maturity profile
Capital Toolkit
Chief Financial Officer and Corporate Treasury
Week 6
Raise capital via
• Internal sources • Equity
• Debt
Characteristics of the firm:
Size, life cycle, nature of operations, cost structure ...
What are capital resources?
Identify
Identify capital needs, evaluate possible sources of capital and set target capital structure.
The resource called capital
What is capital? – A company’s sources of financing which it can use to buy goods, invest in projects or pay expenses.
II) Financing decisions (i.e. how to fund the investment e.g. type, form, horizon)
III) Payout decisions (i.e. what return do we give)
5
Uses of capital:
Sources of capital:
Simplified balance sheet
Current Assets:
• Cash
• Short-term investments • A/R
• Inventory
Liabilities:
• Short-term debt
• Long-term debt
bank loans, bonds, short-term bills
External
Non-Current Assets: • LT Investments
• PP&E
• Buildings
• Machinery • Intangibles
• Goodwill
• Trademarks/patents
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Previously issued equity, preferred equity (from shareholders)
Equity:
• Paid in capital
• Retained earnings
vs. internal
Retained earnings (profit from prior periods)
Demand: Uses of capital
Ongoing expenses (COGS, SG&A) e.g. Payroll
Net working capital e.g. Inventory
Revenue generated by operations
Capital Investments e.g. IT upgrades
Previously retained cash
Supply: Sources of (fresh) capital [Week 8]
Trade Credit & Factoring
Short-term debt e.g. Commercial Paper
Credit facilities e.g. line of credit
Long-term debt e.g. bonds + bank loans
Common Equity
Debt instruments
Equity instruments
Preference Shares
What are capital resources?
Mobilize
Raise capital via
• Internal sources • Equity
• Debt
