Debt and Credit Financing
While there are general rules that each company can rely on to help it determine the best strategies for determining how to finance its short-term and long-term goals. However, as this analysis shows, each company must make financing decisions based on its specific needs and market position.

Companies exist to make money. However, in order to be able to create the products or services with which they can make money, companies also have to be able to bring in money before the point of sale. Building up an inventory requires money (or other forms of capital) and no company can succeed unless it has a well-thought-out and well-defined strategy for financing its ongoing expenses as well as any extraordinary long-term expenses such as building a new factory.

Balancing long- and short-term goals is difficult enough, especially given how volatile the overall economic marketplace can be (as we have all…...

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References

Damodaran, A. (2005). Finding the right financing mix: The capital structure decision.  http://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/capstr.pdf .

Gold, J. (2006). Reducing a Company's Beta: A Novel Way to Increase Shareholders Value, Journal of Applied Corporate Finance 18(4) (Fall).

Harvey, C. (1995). The capital structure and payout policy, WWWFinance.  http://www.duke.edu/~charvey/Classes/ba350/capstruc/capstruc.htm .

Peavler, R. (2011). Debt and equity financing.  http://bizfinance.about.com/od/generalinformatio1/a/debtequityfin.htm

Debt vs. equity financing
As its name implies, debt financing involves borrowing money from a bank, individual, or company, with a promise to pay back the principle with interest. Any organization can make use of debt financing, spanning from a small single proprietorship to a large multinational. The owner of the business retains control over the organization and the only responsibility he or she has to the lender is to make the agreed-upon payments on time (McCormick 2012). These payments are also tax-deductible for the business, one of the attractions of debt financing (McCormick 2012). For this reason, it might be financially advantageous to use this form of financing, if interest rates are low enough. However, there are some drawbacks, namely the fact that when interest rates are high in relation to the business tax rate, the cost of borrowing may be prohibitive. egardless of how well the business may do,…...

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References

Debt v. equity financing. (2012). National Federation of Independent Businesses (NFIB).

Retrieved at  http://www.nfib.com/business-resources/business-resources-item?cmsid=50036 

McCormick, Amanda. (2012). Debt equity. Entrepreneur.com. Retrieved at:

 http://entrepreneurs.about.com/od/financing/a/debtfinancing.htm

When the economy suddenly has more money circulating around there is the threat of inflation. "The Federal eserve is expected to hold its main short-term interest rate at a 45-year low of 1% at its last meeting of the year in December, as well as into part of 2004, economists predict. Holding short-term rates at such low levels might motivate consumers and businesses to spend and invest more, something that would lift economic growth." (Aversa)

Methodologies

The national debt crisis has required a new look at corporate America in regard to valuing the risks and returns of companies and instruments. Many investors apply the Warren Buffet philosophy. Buffett seems to believe that thorough analysis of each company, patient purchasing at the lowest possible price and holding for the long-term will weed out the dogs. Warren Buffet is one of the richest men in America with probably only Bill Gates ahead of him…...

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References

Aversa, Jeannine. "Business Inventories Rise by 0.3%." AP Economic Figures Retrieved on December 5, 2004, from  http://story.news.yahoo.com/news?tmpl=story&ncid=1203&e=2&u=/ap/20031117/ap_on_bi_go_ec_fi/economy&sid=95609868 

Buffet. (2004). "Berkshire Hathaway Inc." Retrieved on December 5, 2004, at  http://www.berkshirehathaway.com/letters/letters.html 

Cauchon, Dennis, & Waggoner, John (10/3/2004). "The Looming National Benefit Crisis." USA Today. Retrieved on December 5, 2004 at  http://www.usatoday.com/news/nation/2004-10-03-debt-cover_x.htm 

Ford to Spend $1bn a Year in China. Ed. Pravda Online. Pravda. Retrieved on December 5, 2004, from  http://english.pravda.ru/comp/2002/09/18/36813.html .

Debt Equity Ratio
Why is debt a comparatively cheaper form of finance than equity?

The debt of a company is sum of money owed to the company from different sources. In contrast, equity refers to the portion of a company's assets that the shareholders own. To sell stock in a company the company must be advertised publicly, if the shareholders extend beyond those of the company's immediate administrators, which can cost money, and also results in more outside control and administrative costs to the business

If debt is cheaper than equity, why do companies approach the equity markets?

In such a debt-based scenario, the different sources have the right to receive and enforce payment from the company. Also, the act of selling stock can act as a form of positive public relations for a company, generating interest in its product or service.

Can one minimize WACC when there is a constraint on raising debt? If…...

Superior Living
How can using more debt impact a firm's capital structure?

The capital structure is comprised of debt and equity so inherently, any change to either will change the firm's capital structure. hat is being proposed is that in advance of our IPO we will take on more debt. There are no universal truths as to what all Street might want to see in a capital structure, and for each firm the decision will be different, but it is important to understand what the changes to the company's capital structure mean. For the company, increasing debt increases the firm's leverage. The firm is therefore riskier, because more of the company's cash flows are dedicated to debt repayment or interest obligations. As such, there is less money left over for the firm's shareholders. However, once the fixed debt obligations are paid off, everything that is left over does go to the shareholders.…...

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Works Cited:

Loth, R. (2006). Evaluating a company's capital structure. Investopedia. Retrieved March 17, 2012 from  http://www.investopedia.com/articles/basics/06/capitalstructure.asp#axzz1pI61aUrV

2004-2010: The Building of a Crisis

Greece's admittance into the Eurozone had its skeptics at the time it happened, and the controversy increased with the admission in 2004 that the deficit figure was fudged in order to allow Greece to join the exchange rate mechanism on January 1, 2000, which was key to the country being allowed to use the Euro when the currency was first introduced on January 1, 2002.

Between 1999 and 2007, the three Eurozone countries with the highest rates of inflation were Ireland, Greece and Spain respectively, each topping 3% per year (de Grauwe, 2009). This inflation was the first sign of the bubble that would eventually become a significant contributor to the debt crisis. Those economies each expanded rapidly in the middle part of the last decade. The following table illustrates the real GDP growth rate of the study countries in the years 2004-2010, the latter figure…...

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Works Cited:

Antweiler, W. (2001). The Euro -- Europe's new currency. University of British Columbia. Retrieved August 31, 2010 from  http://fx.sauder.ubc.ca/euro/euro.html 

BBC. (2001). Greece joins Eurozone. British Broadcasting Corporation. Retrieved August 31, 2010 from  http://news.bbc.co.uk/1/hi/business/1095783.stm 

BBC. (2004). Greece admits to fudging euro entry. British Broadcasting Corporation. Retrieved August 31, 2010 from  http://news.bbc.co.uk/1/hi/business/4012869.stm 

BBC. (2004, 2). Greek debt spirals after Olympics. British Broadcasting Corporation. Retrieved August 31, 2010 from  http://news.bbc.co.uk/1/hi/business/3649268.stm

In addition, the state's various tax revenues would dry up by the year 2005 according to the new tax plan, and the repeal of the federal estate tax would be gradually phased out over a period of ten years. (the Impact of the Bush Tax Cut on Working Families)
In general, all state taxes are based on an equation that says that all credit must be based against a federal tax liability, and this would in effect mean that the federal government would benefit immensely by the very fact that all the money that was originally intended for the states would be accessible to them from the year 2006 to 2011, and the states would inevitably feel the immeasurable loss. The 'National governor's Association' estimates that the windfall for the federal government in this case would be in the amount of, at a rough estimate, $36.5 billion over a period…...

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References

Boy, we really need a Tax Cut. Business Week. 26 February, 2001. Retrieved at   Accessed on 9 November, 2004http://www.businessweek.com/2001/01_09/b3721051.htm .

Definition of Federal Debt. Retrieved at   on 9 November, 2004http://www.google.co.in/search?hl=en&q=define%3AFederal+Debt&btnG=Search&meta=cr%3DcountryINAccessed 

Definition of Public Debt. Retrieved at   on 9 November, 2004http://www.google.co.in/search?hl=en&lr=&oi=defmore&q=define:Public+DebtAccessed 

Gale, William G; Potter, Samara R. The Bush Tax Cut: One Year Later. June 2002.

European sovereign debt crisis has quickly become one of the main topics in today's news and more specifically in business and finance news. The European governments are struggling to not only bring back stability but also maintain it with relation to their finances. John Nugee from State Street Global Advisors has described this European sovereign debt crisis in a very clear and concise manner stating that "economically, it is clear that several EU countries -- most notably Greece, Portugal, Spain, Ireland and Italy within the Eurozone -- have been running very large deficits for some time, and are reaching or have already reached levels of debt-to-GDP that are above 100% GDP." It is important to note, however, that the reasons behind the deficits and large debt levels and in turn the sovereign debt crisis differ between countries. So, we need to begin by taking a closer look at each…...

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Works Cited

"European Sovereign Debt: Crisis That Isn't Going Away - CNBC." Stock Market News, Business News, Financial, Earnings, World Market News and Information - CNBC. N.p., 8 Jan. 2011. Web. 21 Apr. 2011. .

Minder, Raphael. "Borrowing Costs Rise for Spain and Portugal." The New York Times. N.p., 20 Apr. 2011. Web. 20 Apr. 2011. .

"Moody's Drops Ireland Sovereign Rating Two Notches As Euro Falls." Breaking News and Opinion on The Huffington Post. N.p., n.d. Web. 21 Apr. 2011. .

"Moody's downgrades Spain's sovereign debt rating -- " MercoPress." News from Latin America and Mercosur -- " MercoPress. N.p., n.d. Web. 21 Apr. 2011. .

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 must be offered at a discount to the current price in order to attract investors. ith the stock price spike, however, such a discount would still be above the July price, or indeed any price the company's stock had seen in the previous 18 months. Thus, the impacts of the dilution would be minimal to the existing shareholders.
The decision may also have been made on the basis of capital structure. At the time, AMSC did not have any long-term debt.…...

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Works Cited:

Hillstrom, L. (2010). Debt vs. equity financing. eNotes. Retrieved February 4, 2010 from  http://www.enotes.com/management-encyclopedia/debt-vs.-equity-financing 

Esposito, A. (2003). Westboro company plans to raise money through a stock offering. Telegram & Gazette. Aug 23, 2003, pg. E1.

AMSC stock price information from MSN Moneycentral. Retrieved February 4, 2010 from  http://moneycentral.msn.com/investor/charts/chartdl.aspx?Symbol=U.S.%3aAMSC&CP=0&PT=10 

AMSC 2003 Annual Report retrieved February 4, 2010 from  http://media.corporate-ir.net/media_files/irol/86/86422/FileUpload/2003.pdf

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…...

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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

Conclusion

Few students are prepared for the relatively easy availability of credit after they enter college. In many cases, they may have had no experience managing their own credit. Many are encountering their first period of significant debt accrual with student loans, whether directly from the government or through private lending institutions. A student should regard him/herself as an asset, and make some financial assumptions about how much he/she will earn in the future, and what his/her debt capacity is at present.

Although credit card offerings are tempting, it is best for the student to ignore the come-ons and attempt to live on his/her own resources during college. This will insure that the student does not take on short-term debt which he/she cannot cover through current income.

ibliography

lock, S. (2006, February 22). Students suffocate under tens of thousands in loans. USA Today, p. n.p.

Carnahan, I. (2003, August 11). Pay Now, Learn Later. Forbes,…...

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Bibliography

Block, S. (2006, February 22). Students suffocate under tens of thousands in loans. USA Today, p. n.p.

Carnahan, I. (2003, August 11). Pay Now, Learn Later. Forbes, p. n.p.

Day, J.C. (2002). The Big Payoff: Educational Attainment and Synthetic Estimates of Life-Work Earnings. Washington: U.S. Census Bureau.

Hecker, DH (1998). Earnings of College Graduates, Women Compared with Men. Washington: Bureau of Labor Statistics.

U.S. Debt Crisis
Financial crisis is not a totally new concept. It is a fact that more than three quarters of the entire members of the IMF, whether they are developed or developing countries have been affected by a serious financial crisis ever since the year 1980, demonstrating the instability of the world wide global economy. he origins of the financial crises may be different, but what all these crises have in common is the fact that they were all preceded by a phase in which large amounts of foreign capital flowed into their country, and this resulted in the support of current account deficits. he stock markets soared downwards, the price of consumer goods fell and serious constraint in the government finances observed to have occurred all over the world. his phase demonstrates a decline in the imports of United States and simultaneously affecting the countries relying on exports to…...

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The September 11, 2001 attacks of the terrorism in United States were at a time when U.S. was undergoing serious economic upsets. Ever since the beginning of the 2000 the U.S. economy is observed to have been consistently moving towards a recession, to be more particular to a stage of deep recession even without the event of September, 11. This is not considered downturn of the business cycle but demonstrated the conditions that resulted in the boom of 80s and still greater boom of 90s. Even prior to the September, 11 incidents the policy makers of U.S. Capitalism were started struggling with the serious strategic concerns that had developed. The continuation of a relatively high level of consumer spending that was beginning to be eroded by the growth and employment particularly in the manufacturing sector, was considered to be the only solace that hold back the economy from a sharp slump. (World economy: The economic aftermath)

Irrespective of the fall on the stock exchange ever since the crash of the technology stocks in March 2000, the shares remained overrated in relation to the company profits that had been radically falling. Further sharp fall were evident even without the imprudent reactions to the attacks on New York and Washington. Ever since the period from 1929-31 the attacks were considered to have greatest influence over the economy in form of falls on stock exchanges around the world. These falls were to eradicate a large share known as 'wealth effect', that was the inclination of the investors to invest more and the consumers to spend more as a result of the growth of their financial assets. To mitigate the crisis, the attempt of the Federal Reserve was to immediately infuse $38 billion of liquidity and the Bank of Japan, the European Central Bank, the Bank of England, etc. had also similar efforts. This immediately checked an immediate economic collapse that could have resulted from the gradual reactions of failure in payments as a result of suspension of trading in New York and crisis in cash flow for many finance houses. (World economy: The economic aftermath)

The quickest response was observed for the sector of airlines that confronted devastating losses and bankruptcy. The devastations caused by September, 11 have made the major insurance companies to suffer from huge losses. The post attack period witnessed immediate increase in the crude oil price by more than $3.50 per barrel. Irrespective of the symbols of growing recession for many months prior to September, 11, 2001, the serious concern for the economic situation was not taken by many sections of the U.S. citizens. The advantages of the recent wage increases were continuing to have gradual impact while the inflation and interest rates were very low. The sufferings of the workers were limited to their unemployment. Some financial experts were become cold solace to their clients by telling that the wars were often good enough for the business. It was quite evident to observe that the opening of the New York Stock Exchange

In most countries, a rise in debt would have a series of economic consequences leading to the devaluation of the currency and a return to an equilibrium. This has not happened with the U.S. dollar because of a unique externality -- its role as the world's currency. However, that role itself dependent on a number of factors, including but not limited to domestic resources stocks, strong legal and political systems and sound economic policy. It is conceivable that a shift in these underlying qualities -- such as the decline in foreign confidence in U.S. accounting systems -- could signal a shift to other currencies such as the Euro as the world's default. ithout that key externality, the U.S. dollar would be subject to collapse. This may take more time to occur with the dollar than with other currencies, but ultimately market forces will prevail, meaning that the U.S. debt…...

Convertible Debt: elevance and Features
In basic terms, a convertible debenture can be viewed as a means of financing in which case the debt-holder is given an option of converting the debt to stock. Like an ordinary debt, convertible debentures pay the debt-holder an interest. Companies including but not limited to small "dot-com" companies have in the past used convertible debentures to not only raise the capital they require to grow but to also maintain their businesses. Such companies choose to use this means of finance for a variety of reasons.

To begin with, it is important to note that unlike ordinary debentures, convertible debentures have a conversion feature. This feature should be likened to a sweetener. For any small business, attracting capital could prove really difficult. This is more so the case for small startups with unproven profitability and limited operating history. It is important to note that although many small…...

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References

Brigham, E.F. & Daves, P.R. (2009). Intermediate Financial Management (10th ed.). Mason, OH: Cengage Learning.

Lumby, S. & Jones, C. (2003). Corporate Finance: Theory and Practice (7th ed.). Bedford Row, London: Thomson Learning.

When you seeing, consistent amounts of deficits or surpluses, this will have an impact on the debt level. As, this will cause the sum to: rise or fall, which is a sign of the underlying trends. Over the course of time, these patterns can cause the amounts of debt to increase (if there are large deficits). While the debt, will decline when the government is reporting consistent surpluses. This is significant, because it is showing how these two factors will have an impact on the size of the debt. (Cashell, 2010)
Discuss the Impact on Interest Rates and Future Tax urdens

If the debt is allowed to increase it will mean that interest rates and taxes will rise. The reason why, is because the creditworthiness of the federal government will be brought into question. This will cause interest rates for a wide variety of loans to multiply. At the same time,…...

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Bibliography

Cashell, B. (2010). The Federal Government Debt. Congressional Research Service. Retrieved from:  http://www.fas.org/sgp/crs/misc/RL31590.pdf 

US Government Spending. (2011). U.S. Government Spending. Retrieved from:  http://www.usgovernmentspending.com/downchart_gs.php?year=1990_2011&view=1&expand=&units=k&fy=fy11&chart=H0-fed&bar=0&stack=1&size=m&title=&state=U.S.&color=c&local=s

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Home Depot, like most big companies, carries a lot of debt. It can reduce debt by raising prices or paying lower wages, but those aren\'t going to work as long term solutions. To avoid shortchanging customers, which can really cause cash flow problems, Home Depot will need to reduce its spending in a way that doesn\'t affect customers. That can mean restructuring, refinancing, closing stores that are not profitable, lowering the salaries of top executives, and finding related ways to spend less while continuing to keep money coming in. Other stores have done this successfully. You may want to start....

Certainly! Here are some essay topic ideas related to Barack Obama:

1. Analyzing the major accomplishments and legacy of Barack Obama as President of the United States.
2. Exploring the challenges and obstacles faced by Obama during his presidency and evaluating his responses.
3. Investigating the impact of Obama's healthcare reform, the Affordable Care Act (ACA), on the American healthcare system.
4. Discussing Obama's approach to foreign policy, focusing on significant events such as the Iran nuclear deal or the Paris Climate Agreement.
5. Examining the Obama administration's efforts to address climate change and promote clean energy.
6. Assessing the economic policies and strategies implemented by....

The Economic Plague: Unraveling the Perils of Persistent Inflation

The Contagion of Inflation: Its Causes, Consequences, and Cures

Inflation: A Pandemic for the Economy, a Remedy for the Debtors

The Silent Thief: Inflation's Insidious Impact on Households and Societies

Unveiling the Enigma of Inflation: A Multifaceted Exploration of Causes and Effects

The Inflation Crisis: A Symptom of Deeper Economic Malaise

Hyperinflation: The Monetary Abyss, Historical Precedents, and Lessons Learned

Inflation: A Catalyst for Social Unrest, Political Instability, and Economic Collapse

Taming the Inflationary Beast: Central Banks, Monetary Policy, and the Fight Against Price Spirals

The Dilemma of Inflation: Its Short-Term Benefits and Long-Term Detriments

Inflation, a Global Scourge: Tracing Its....