Enterprise Finance – Shares and Equity

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The phrase equity finance refers to share capital that is invested into a organization for the medium to long phrase in return for a share of the ownership and in a lot of circumstances an element of control more than the running of the business. There are two principal types of equity finance obtainable to firms. These are business angels and venture capitalists. Equity finance is quick becoming a single of the most popular techniques of gaining commence up finance for firms.

Equity finance is the excellent instance of accurate threat capital. This is simply because there is no guarantee that your investor will ever get there money back. In contrast to lenders equity finance investors never normally have the rights to interest or to be repaid at a distinct date. The way in which equity investors regain the income that they have invested into a organization is by means of taking a share of the organization and a percentage of the profit. It is since of this higher risk involved in equity finance that if your organization can not assistance development rates of at least 20% you could not be capable to attract equity funding. Equity investors are more probably to invest in somebody they feel they can trust with a clear company plan and approach.

As a business you need a clear enterprise program and strategy regardless of what variety of company start off up finance you are hoping to attract. You require a comprehensive business program with a detailed advertising program and your monetary forecast. Your business plan requirements to address problems such as how much funding you are going to require and how significantly manage you are hoping to retain over your enterprise. You also need to obviously state what you are employing your organization start off up finance for as effectively as if your plans are realistic and if your venture is suitable for outside funding. While you are finishing your company strategy you also need to consider what potential investors may be concerned about. With no all of this plus much a lot more no possible investor will go near your company, organizing is crucial if you are hoping to safe external funding.

If you are hoping to obtain the economic support of an equity investor there are a number of queries that you require to hold in mind such as are you prepared to give up some of the shares within your business as properly as portion of the manage more than your enterprise? Investors will expect to have some say in the way in which your business is run so you ought to be prepared for this. You also want to be confident in your enterprise and the products and solutions that your enterprise has to offer you, one particular way in which you can do this is by identifying what your companies unique selling point is. As properly as this you also want to have the necessary sector capabilities and expertise to drive your enterprise.

For much more information about what equity finance can do for your enterprise get in touch with a company angel or venture capitalist today and they will advise you on what to do next.

25 Responses to “Enterprise Finance – Shares and Equity”

  1. Scottie January 5, 2013 at 6:55 pm #

    I’ve no clue how to get it done, however i suggest all regular Aussies should get together and purchase the Ord the use possibilities are perfect and that we keep charge of our country, we are able to allow foriegn share holders, but we should keep your greater stake, who’ll join me within this mission.

    Maybe rather than totally eliminating the Carbon tax we ought to lower it to 6 dollars a tonne and employ this to purchase Australias food capacity being an adjunct to the various climate zones effecting consistency of supply, please participate in this mission. to help keep then Ord within our hands.

    Craig Emerson thinks we’re stupid as he assaulted the ABC Ticky Fullerton about how dare she question the truly amazing patriot, Bob Hawke, exactly what a joke, Hawke destroyed it for employees and established this lawyer run ALP that sponges from the employees now he’s prepared to sell Australia,

    The issue with modern Political parties is that they dont actualy work for anyone they have too near to business, but surely we the folks possess a to let them know you want to purchase the Ord.

    look I’m a cave guy if this involves the internet so how exactly does oe start an online petition.

    therefore we the folks purchase the Ord, in the end china won’t let’s buy much of China so unless of course it’s reciprical tthere shouldn’t be such handles china and by doing this we gain respect simultaneously.

  2. Cathleen January 5, 2013 at 6:55 pm #

    I am doing a report on investment bankers and i need to know what Corporate Finance, Trading and Research Analysis is. I would really appreciate it if someone could tell me what each one is and what an investment banker does with these “skills”. ~ Thank you ~

  3. Shasta January 5, 2013 at 6:55 pm #

    I get my property evaluated for equity financing and my loan provider has explained to not tell the evaluator that involves perform the evaluation what I am obtaining the evaluation for. Why are they going to let me know this? Would the evaluator appraise my property for pretty much?

  4. Elizabeth January 5, 2013 at 6:56 pm #

    1)You’ve been designated the job of utilizing the organization, reely income, model to estimate Petry Corporation’s intrinsic value. The firm’s WACC is 10.00%, its finish-of-year free income (FCF) is anticipated to become $90. million, the FCFs are required to develop in a constant rate of 5.00% annually later on, the organization has $200 million of lengthy-term debt and preferred stock, and contains $ 30 million shares of common stock outstanding. What’s the firm’s believed intrinsic value per share of common stock?

    1. $44.80

    2. $65.07

    3. $46.93

    4. $53.33

    5. $52.27

    2) The Ramirez Company’s last dividend was $1.75. Its dividend rate of growth is anticipated to become constant at 15% for just two years, then returns are required to develop for a price of 6% forever. Its needed return (r) is 12%. What’s the best estimate of the present stock cost?

    1. $36.60

    2. $38.77

    3. $39.14

    4. $42.76

    5. $36.24

    3)Huang Company’s last dividend was $1.25. The dividend rate of growth is anticipated to become constant at 30% for three years, then returns are required to develop for a price of 6% forever. When the firm’s needed return (r) is 11%, what’s its current stock cost?

    1. $47.76

    2. $43.46

    3. $53.01

    4. $38.68

    5. $54.92

  5. Reuben February 18, 2013 at 6:58 am #

    Insurance is a con. Worse than Social Security, even – because you pay in and (normally) never get anything back.

    Consider: You pay say $800 a year to insure your car. Over a ten year period that comes to $8,000. Gone. Out the window. You’ll never see it again.

    Think about this. Most people don’t have major accidents. Insurance companies know this – and bank on it. For every dollar they pay out (grudgingly and after much-ado, usually) they take in probably ten more. Insurance companies are hugely profitable enterprises. I won’t call them businesses, because businesses – properly described – provide a useful product or service. They also don’t force you to to be a “customer,” as insurance companies do, having successfully egged on their bought-and-paid for agents in state government (that is, politicians) to pass laws making insurance “coverage” mandatory.

    It is no coincidence that the bankrupting of America has tracked parallel with the rise of FIRE (Finance, Insurance, Real Estate). When you add up car, life, health and home insurance, many people are spending $10,000 a year or more for …. nothing! They’ve been gulled into believing they’re “covered” but they’ll be disabused of that notion if they ever have to file a claim. Yes, the insurer might pay… something… eventually. But if it does, it will also double – or cancel – your premiums for future “coverage.” Ask anyone who has filed a major claim. Even after decades of just paying in. As soon as the math starts working out in favor of the insured – even a little bit – the terms of the relationship are swiftly altered to correct the imbalance.

    Now let’s talk about car insurance specifically. It was made mandatory on the argument that it’s just not right to permit people to operate potentially lethal and always dangerous motor vehicles on public motorways without the driver having the means to compensate potential victims for any damages or injuries he might cause.

    But that was just window dressing. The real motive was to create a coerced and captive “customer” base that had no choice but to pay up. Government-enforced cartels are secure from market pressure; they don’t have to worry about pleasing people – because the people have no choice. Oh, they can shop Tweedledee, perhaps. But he’s not much of an improvement over Tweedledum.

    read the rest: http://www.lewrockwell.com/peters-e/peters-e40.1.html

    ————————————-

    I’ve long felt the same way about insurance (actually, I’m much more opposed to insurance than the author of this article is). Most people who purchase insurance are basically just throwing their money away. Basically, you would be better off if you took all the money you use to purchase insurance and stuffed it under your mattress (although that isn’t a good idea because the Dollar’s value is only heading down and I doubt it will ever increase in value again).

    I agree that the rise of “finance” and real estate as major sectors of the economy has been disastrous. The entire “finance” industry is basically backed by the Federal Reserve’s policy of endless inflation. The finance industry is a “good investment” during the artificial booms (fueled by the Fed), but when the inevitable crash hits, you will lose your money. Real estate was just a massive bubble which fraudulently sold consumption goods as “the best investment you can buy” (does this remind you of today’s college advertising?) and got a bunch of suckers deep in debt to the banks.

    Nobody my age (early 20s) who isn’t wholly ignorant of reality (and yes, there are many people my age whom that description applies to) looks at Social Security as anything other than a Ponzi scheme that will transfer our wealth from us to our parents (who blew their wealth on real estate, insurance, and on dubious investments with the finance industry). Nobody under 30 will ever see a penny from Social Security (I doubt anybody under 40 will). One of these days, people will look back at the Obamacare debate and see how the Democrats compared that debacle to the even worse debacles of Social Security and Medicare (as if these were good things!) and be horrified that people actually held such views. Yet, the insurance industry is even worse than Social Security when it comes to cheating people out of their money for little or nothing in return. It is truly sad that people are willing to hand over their money (and other things much more valuable than money) for nothing more than (often empty) promises of “security.”

  6. Earleen February 21, 2013 at 1:45 pm #

    sales- 6mil
    ROE- 12%
    Asset turnover- 3.2x
    equity financed- 50%
    No preferred stock outstanding. What is the net income?

  7. Shan February 25, 2013 at 9:45 pm #

    what’s the difference betwen Profit and Loss Statement and cash flow

  8. Manual April 14, 2013 at 11:40 am #

    I know it’s a type of format for accounting but I wish to know more and if you have any websites with examples it would help a lot. I need to work a cash flow statement from a balance sheet in accordance to IAS 7, so if you websites that have examples of this procedure, let me know!

    THANKS

  9. Shan April 24, 2013 at 6:20 am #

    We have a LLC and want to go public via equity financing. Can a LLC go public? Sell shares? I’ve been told that an LLC “does not have shares, it has units”. We need to raise capital ($1 Million). Can someone please clarify? Thanks!

  10. Salvatore April 27, 2013 at 5:24 pm #

    What did Singapore do differently than other Southeast Asian countries? The countries near her are poor, corrupted, and violent. How did Singapore escape the same fate as her neighbors? And why does Singapore have almost no homeless?

  11. Idell April 29, 2013 at 11:45 am #

    What proportion of a firm is equity financed if the WACC is 14%, the before-tax cost of debt is 10.77%, the tax rate is 35%, and the required return on equity is 18%?

  12. Shiloh May 4, 2013 at 5:09 am #

    I’m supposed to define it for an assignment and I’ve spent the past hour finding absolutely nothing. Can someone help explain this to me?

  13. Ferne May 30, 2013 at 5:34 am #

    I know it’s a type of format for accounting but I wish to know more and if you have any websites with examples it would help a lot. I need to work a cash flow statement from a balance sheet in accordance to IAS 7, so if you websites that have examples of this procedure, let me know!

    THANKS

  14. Susy July 22, 2013 at 1:12 am #

    The 2007 income statement of Ambrosia Enterprises shows operating revenues of $206,700, selling expenses of $52,200, general and administrative expenses of $47,110, interest expense of $1,020 and income tax expense of $27,000. Ambrosia’s stockholders’ equity was $335,000 at the beginning of the year and $385,000 at the end of the year. The company has 30,000 shares of stock outstanding at December 31, 2007.

    Compute Ambrosia’s profit margin. Round the percentage to one decimal place.

  15. Miquel July 26, 2013 at 3:17 am #

    Three Monkeys Enterprises
    Balance Sheet and Income Statement Data
    December 31,December 31,
    2011 2010___
    Current Assets:
    Cash$153,000$119,000
    Accounts Receivable238,000306,000
    Inventory 391,000 340,000
    Total Current Assets782,000765,000

    Property, Plant, and Equipment1,241,0001,122,000
    Less: Accumulated Depreciation (476,000) (442,000)
    Total Assets$1,547,000$1,445,000

    Current Liabilities:
    Accounts Payable$187,000$102,000
    Notes Payable51,00068,000
    Income Tax Payable 85,000 76,500
    Total Current Liabilities323,000246,500

    Bonds Payable340,000391,000
    Total Liabilities663,000637,500

    Stockholders’ Equity:
    Common Stock 510,000467,500
    Retained Earnings374,000340,000
    Total Stockholders’ Equity 884,000 807,500
    Total Liabilities & Stockholders’ Equity$1,547,000$1,445,000

    Sales1,615,000$1,513,000
    Less Cost of Goods Sold731,000731,000
    Gross Profit884,000782,000
    Expenses:
    Depreciation Expense153,000136,000
    Salary Expense391,000357,000
    Interest Expense34,00034,000
    Loss on Sale of Equipment 17,000 0
    Income Before Taxes289,000255,000
    Less Income Tax Expense 119,000 102,000
    Net Income$170,000$153,000

    Additional Information:
    During the year, Johnston sold equipment with an original cost of $153,000 and accumulated depreciation of $119,000 and purchased new equipment for $272,000. Three Monkeys Enterprises had 510,000 shares of common stock outstanding as of December 31, 2011. Three Monkeys Enterprises paid dividends in 2011.

    Instructions: Write the 2011 Statement of Cash Flows for Three Monkeys Enterprises using the indirect method.

  16. Torie July 31, 2013 at 2:10 pm #

    1. Which one of the following types of stock is defined by the fact that it receives no preferential
    treatment in respect to either dividends or bankruptcy proceedings?
    A. dual class
    B. cumulative
    C. non-cumulative
    D. preferred
    E. common

    2. Callander Enterprises stock is listed on NASDAQ. The firm is planning to issue some new equity
    shares for sale to the general public. This sale will occur in which one of the following markets?
    A. private
    B. auction
    C. exchange floor
    D. secondary
    E. primary

    3. National Trucking has paid an annual dividend of $1.00 per share on its common stock for the
    past fifteen years and is expected to continue paying a dollar a share long into the future. Given
    this, one share of the firm’s stock is:
    A. basically worthless as it offers no growth potential.
    B. equal in value to the present value of $1 paid one year from today.
    C. priced the same as a $1 perpetuity.
    D. valued at an assumed growth rate of one percent.
    E. worth $1 a share in the current market.

    4. Answer this question based on the dividend growth model. If you expect the required market rate
    of return to increase across the board on all equity securities, then you should also expect:
    A. an increase in all stock values.
    B. all stock values to remain constant.
    C. a decrease in all stock values.
    D. dividend-paying stocks to maintain a constant price while non-dividend paying stocks decrease
    in value.
    E. dividend-paying stocks to increase in price while non-dividend paying stocks decrease in
    value.

    5. Denver Shoppes will pay an annual dividend of $1.46 a share next year with future dividends
    increasing by 4.2 percent annually. What is the market rate of return if the stock is currently
    selling for $38.90 a share?
    A. 6.55 percent
    B. 7.13 percent
    C. 7.46 percent
    D. 7.95 percent
    E. 8.29 percent

    6. 59. How much are you willing to pay for one share of Jumbo Trout stock if the company just paid
    a $0.70 annual dividend, the dividends increase by 1.6 percent annually, and you require a 10
    percent rate of return?
    A. $8.29
    B. $8.33
    C. $8.47
    D. $8.53
    E. $8.59

    7. A stock pays a constant annual dividend and sells for $56.10 a share. If the market rate of return
    on this stock is 15.85 percent, what is the amount of the next annual dividend?
    A. $7.67
    B. $7.94
    C. $8.21
    D. $8.89
    E. $10.30

    8. Roy’s Welding Supplies common stock sells for $38 a share and pays an annual dividend that
    increases by 3 percent annually. The market rate of return on this stock is 8.20 percent. What is
    the amount of the last dividend paid?
    A. $1.80
    B. $1.86
    C. $1.92
    D. $1.98
    E. $2.10

    9. Sessler Manufacturers made two announcements concerning its common stock today. First, the
    company announced that the next annual dividend will be $1.75 a share. Secondly, all dividends
    after that will decrease by 1.5 percent annually. What is the maximum amount you should pay to
    purchase a share of this stock today if you require a 14 percent rate of return?
    A. $11.29
    B. $12.64
    C. $13.27
    D. $14.00
    E. $14.21

    10. Great Lakes Health Care common stock offers an expected total return of 9.2 percent. The last
    annual dividend was $2.10 a share. Dividends increase at a constant 2.6 percent per year. What is
    the dividend yield?
    A. 3.75 percent
    B. 4.20 percent
    C. 4.55 percent
    D. 5.25 percent
    E. 6.60 percent

    This class is bringing me nightmares. Thank you for any help.

  17. Francis August 2, 2013 at 12:57 am #

    I heard Wipro has a unit in Sidcul.just wanted to know how many IT companies have come in there & what is their core business in Haridwar sidcul.
    secondly is there any scope of MBA Finance in haridwar Sidcul? there has to be an enormous scope but not getting up the enough information.Kindly guide me up.

  18. Ross August 3, 2013 at 6:04 am #

    under what condition would a manager would prefer debt to equity financing?

  19. Julissa August 4, 2013 at 7:49 am #

    According to the CE resident racist fruitbat:

    The Mark Bridger case is now worldwide and people are sickened by it.
    You granted an OBE to serial paedophile and called him ‘sir’ ! Jimmy.

    So share your tales of how you awarded your hero’s an OBE, did you do it in your own front room, or down the Flying Pig? Only last week I awarded one to John Barrowman for his outstanding campness in adversity.

  20. Kellee August 21, 2013 at 12:32 am #

    Which of the following actions could
    a *NEW* company take to obtain equity
    financing for growth?

    A. Issue corporate bonds.
    B. Hold an initial public offering (IPO)
    of stock.
    C. Purchase debenture bonds.
    D. Secure a low-interest loan from a
    lending institution.

    Keyword being new company, assuming little to no profitability records.
    EDIT: How could a new company hold an IPO, with no corporate history? Who would invest?

  21. Lewis August 22, 2013 at 11:20 pm #

    in the most simplest simplest simplest way (as if your going to explain it to an 8 grader) can anyone tell me what impact investing is?

  22. Georgina August 23, 2013 at 9:31 am #

    A.An increase in leverage will be offset by a decrease in equity financing, thus leaving WACC unchanged.
    B.Changes in leverage will affect the WACC only if the interest rate on debt changes.
    C. Increased leverage will increase the WACC.
    D. Increased leverage will decrease the WACC.

  23. Damon August 24, 2013 at 12:51 pm #

    Which of the following is an advantage of equity financing over debt financing?

    A. The original partners can maintain total control of the company.
    B. Equity financing provides necessary capital more quickly than a loan.
    C. It’s possible to raise more money than a loan can usually provide.
    D. Debt financing is reserved for large corporations with a history of high profits.

  24. Georgette September 7, 2013 at 12:18 am #

    I plan to open my own arcade in town one way or another. I found the opportunity to apply for a grant but am having difficulty finding the correct one to apply for. I just want to apply for a small business grant but I cant seem to get ahold of the proper FON number ( funding opportunity number) or CFDA number. If someone has done this before any advice would be helpful and if you know one of those numbers I would appreciate you sharing the information.

  25. Elizabeth September 14, 2013 at 8:32 pm #

    I want to take a home equity loan from a USA bank on my home in USA and use the proceeds to buy a second house in India? Can I deduct the interest on this home equity loan from my income for tax purpose?

    If so, what kind of proof do I need to provide to show that the money is used to buy a house?
    I am subjected to AMT… Is it still deductible for AMT?

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