Means & Modes Of Coporate finance

1. Topic:
Means Modes of Corporate Finance
Presented to: Sir Shahbaz Noor
Presented by: Mateen Altaf
Class: MBA (B&F) 4th semester
Subject: Corporate Finance (8524)
mataltaf@hotmail.com
Allama Iqbal Open
University, Islamabad

2. Acknowledgment
First of all thanks to ALLAH, Who is most beneficent & the
most merciful, Whose blessings are abundant & favors are
unlimited.
It’s my pleasure to acknowledge the guidance and support of
my subject teacher Mr. “Shahbaz Noor” for his endless
guidance.

3. Introduction
Terminologies:
 Corporate:
A corporation is a separate legal entity that has been
incorporated either directly through legislation or through a
registration process established by law.
 Financing:
An act of providing money for a project.

4. The area that involves the financial aspects of
a business or corporation, Financial aspects
include accounting and investments.
Corporate Finance:
(Source: Brealy and Myres, 6th Edition, Principles of Corporate Finance.)

5. Corporate Financing
Debt Financing
Short Term Long Term
Intrest
Equity
Financing
Common Stock Preferred Stock
Dividend

6. Notes Payable $ 290
Acct. Payable 94
Accrued Taxes 16
Other Accrued Liab. 100
Current Liab. $ 500
Long-Term Debt 530
Shareholders’ Equity
Com. Stock ($1 par) 200
Add Pd in Capital 729
Retained Earnings 210
Total Equity $1,139
Total Liab/Equity $2,169
Basket Wonders Balance Sheet (thousands)
Dec. 31, 2003
Cash and C.E. $ 90
Acct. Rec. 394
Inventories 696
Prepaid Exp 5
Accum Tax Prepay 10
Current Assets $1,195
Fixed Assets (@Cost) 1030
Less: Acc. Depr. (329)
Net Fix. Assets $ 701
Investment, LT 50
Other Assets, LT 223
Total Assets $2,169
Assets Liabilities

7. Total Debt
Shareholders’ Equity
For Basket Wonders
December 31, 2003
$1,030
$1,139 = .90
Shows the extent to
which the firm is
financed by debt.
Debt-to-Equity

8. Total Debt
Total Assets
For Basket Wonders
December 31, 2003
Debt-to-Total-Assets
$1,030
$2,169
= .47
Shows the percentage
of the firm’s assets
that are supported by
debt financing.

9. Total Debt
Total Capitalization
For Basket Wonders
December 31, 2003
(i.e., LT-Debt + Equity)
Total Capitalization
$1,030
$1,669
= .62
Shows the relative
importance of long-term
debt to the long-term
financing of the firm.