Joseph Fabiilli is explaining, how to finding efficient sources of funds. Joseph Fabiilli is a funding consultant for future-thinking entrepreneurs and agencies. Joseph helps people secure funding for their environmental projects and programs.

1. Finding efficient sources of funds
Joseph Fabiilli

2. Finance is the study of money within the
firm.

3. I. Cash Flow Through a Business
$
Borrowed
funds Sale of
fixed assets
Collection of
accounts receivable
Payment of
expenses
Purchase of
inventory
Payment of
dividends
Purchase of
fixed assets
Cash sales
Owners’
investment

4. A. Projecting outward flow of cash
(month-by-month)
• Cost of daily operations
• cost of credit services
• cost of inventory
• purchase of major assets
• payment of debt
• payment of dividends

5. B. Projected flow of cash into the
business (month-by-month)
• Daily cash sales
• accounts receivable being collected
• investment income
• interest income

6. C. Compare monthly inflows to outflows
• Perfect match: no financial action needed
• expenditures > cash inflow: additional funds
are needed
• cash inflow > expenditures: cash surplus

7. II. Generating Revenue from
excess funds
A. Expansion - increase production capacity,
adding sales outlets, acquire another firm
B. High-liquidity investments
(treasury bills, commercial paper, certificates
of deposits)

8. III. Finding efficient sources of funds
A. Short-term financing - financing used to
obtain money to finance current operations,
with repayment required within one year
1. Debt financing
a. trade credit - accts payable
b. commercial banks (loans, line of credit,
factoring, floor planning)
2. Internal funds management

9. Finding sources (cont’d)
B. Long-term financing - financing used to
obtain money which will be repaid
in more than a year’s time
1. debt financing
a. loans - promissory note (payment schedule)
b. bonds - IOU with an investor (periodic
interest payments, principal at maturity)
2. equity financing
a. retained earnings
b. venture capital
c. public sale of stock

10. Debt vs. Equity Financing
Management
Claim on income &
assets
Maturity
Tax treatment
Debt
creditors have none
greater claim
stated maturity
interest is deductible
Equity
stockholders vote
residual claim
no maturity
dividends not
deductible

11. IV. Managing the finances of the firm
A. Managing working capital
{current assets minus current liabilities}
1. cash 2. float
3. acct. receivable 4. inventory
B. Developing capital budgets
C. Developing financial controls

12. V. Securities - investment certificates
issued by corporations or governments
that represent either equity or debt
A. Primary market
1. new securities sold to the public
2. issuer gets proceeds
B. Secondary market
1. already issued securities are traded
2. stock exchanges, commodities exchanges,
over-the-counter market

13. C. Role of Investment Bankers and
Stockbrokers
• Corporations and government
(buy securities at agreed upon price)
• Investment bankers/stockbrokers
(resell securities at higher price)
• Public

14. VI. Securities Exchanges
A. Organized stock exchanges
1. re-sell securities in an auction-type format
2. US stock exchanges
• New York Stock Exchange - began in 1792
• American Stock Exchange
3. Global trading & foreign exchanges
B. Over-the-Counter Market
1. electronic-based NASDAQ, first electronic-based stock
market with up-to-date bid and ask prices
C. Regulation of securities markets
1. Securities legislation - insider trading
2. Self-regulation

15. Thank You