Verified Document

Equity And Debt Amsc Has Research Proposal

Related Topics:

4 million during its most recent quarter before the decision to take on equity financing (American Superconductor opts for secondary offering, 2003). Therefore, with cash reserves of only $12.1 million, there's some concern that the company could not make regular monthly debt payments on an ongoing basis. In particular, a forecast for a reduction in the cost of funding operations from $48 million to $13-$15 million is pretty drastic for a growth company and AMSC may end up with more operational costs than it is currently anticipating. Even if it could meet the regular debt payments, AMSC can use the money that would have gone towards those debt payments to further invest in its business which appears to have exciting growth potential. With the equity financing choice, payment distribution to shareholders occurs on a yearly basis at which time the company can determine appropriate dividend payments after it's fully aware of its yearly financial performance. This situation can be very good for shareholders if AMSC performs as intended.

Although there are a few draw backs, these are not serious. True, additional equity financing means relinquishing more company control, but the company is already public. As such, AMSC is under the pressure of investors and subject to the extensive reporting and legal and regulatory compliance requirements that come with being a public entity. Currently, AMSC is entirely equity financed and this may not necessarily be desirable in the future. but, AMSC can always buy back shares...

Boston Business Journal. http://boston.bizjournals.com/boston/stories/2003/08/25/daily4.html
Equity financing. http://www.answers.com/topic/equity-financing

What are the advantages and disadvantages of debt financing? (2007). http://bondsdebt.net/Debt/debt-financing-advantages/

$50 million is public stock prices has risen 305% this year

. First, AMSC has picked up revenue momentum and is on track toward achieving its target of $45 million to $50 million in revenue this year, more than doubling revenue of fiscal 2003.

Secondly, AMSC's high temperature superconductor motor and generator business unit, which is working on a large U.S. Navy contract, was profitable in the first quarter ended June 30 -- one quarter ahead of expectations.

Finally, the Northeast blackout "shined a lot of light on the problems we have been talking about as a company for three to four years,"

At June 30, AMSC had cash reserves of $12.1 million. Last year the company spent $48 million to fund operations. But this year, because of cost savings and other steps, spending is forecast at $13 million to $15 million.

AMSC needs the money for general corporate purposes and to scale up manufacturing at Devens of its second-generation high temperature superconductor wire

Sources used in this document:
Bibliography

American Superconductor opts for secondary offering (2003, August 25). Boston Business Journal. http://boston.bizjournals.com/boston/stories/2003/08/25/daily4.html

Equity financing. http://www.answers.com/topic/equity-financing

What are the advantages and disadvantages of debt financing? (2007). http://bondsdebt.net/Debt/debt-financing-advantages/

$50 million is public stock prices has risen 305% this year
Cite this Document:
Copy Bibliography Citation

Related Documents

Equity and Debt Capital Structure
Words: 1045 Length: 3 Document Type: Essay

AMSC had announced a letter of intent for secured debt financing in July of 2003 (AMSC 2003 Annual Report) when the stock was trading in the range of $8 per share. The blackout gave the firm's stock considerable momentum, and it finished the month of August up over 50% at $12.19 per share (MSN Moneycentral, 2010). Equity issues normally result in dilution of the stock price, since the issue

Risk There Are Two Kinds of Risk
Words: 1077 Length: 4 Document Type: Essay

Risk There are two kinds of risk that a company faces. Systematic risk is risk that is inherent in the economy. This risk is generated largely by external factors to the company, such that the company has little control over these factors. This type of risk is faced by all companies (or most of them) within the economy and as a result it is very difficult to diversify systematic risk away.

CAPM the First Scenario Represents a Diversifiable
Words: 1369 Length: 5 Document Type: Essay

CAPM The first scenario represents a diversifiable risk. The rate of inflation has an effect on the whole economy, but the nature and direction of that effect is something that will be different for each firm. Some firms may suffer more than others from the effects of a higher rate of inflation, depending on their business model, their capital structure and their strategy. In addition, inflation rates are a national phenomenon.

American Superconductor Case Study Founded in April
Words: 870 Length: 3 Document Type: Essay

American Superconductor Case Study Founded in April 1987 with $4.5 million in seed capital from an investment consortium (Google Timeline. American Superconductors. 2010); American Superconductor has grown into a "global leader in renewable energy, providing proven, megawatt-scale wind turbine designs and electrical control systems" (American Superconductors: Investors. 2010). The company works to "develop solutions and manufacture products to dramatically improve the cost, efficiency and reliability of systems that generate, deliver and

Business, It Is Vital for Business Owners
Words: 1645 Length: 4 Document Type: Essay

business, it is vital for business owners to measure the value of their assets and to evaluate the performance of their business at any point in time. In fact, majority of strategies for popular multinational corporations, such as Samsung, Apple and Starbucks, are formulated based on the financial performance of the company as compared to other companies in a particular industry. Two courses, ACC201 and FIN301, introduce learners to

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now