Means of Corporate Financing in Indian Market

By

TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION1

Background of the Research1

Bond Issue2

Credit Ordinary2

The Operations of Discount3

Basic forms of corporate financing4

Equity financing and self-financing4

Credit financing and reserves4

Research aims and objectives5

Aim5

Objectives5

Research questions5

CHAPTER 2: LITERATURE REVIEW7

Financing7

Types of corporate finance8

Internal financing8

External financing9

Difference between Internal and External Financing9

Examples10

External or debt financing11

Combined external funding12

Loan external funding12

CHAPTER 3: METHODOLOGY14

Research design14

Qualitative research method14

Secondary research method15

Literature Search15

Keywords Used16

REFERENCES17

CHAPTER 1: INTRODUCTION

Background of the Research

Companies need to grow its financial resources. These resources are defined as sources of financing, which may be internal and external (Stern, Chew, 2003, 80). The internal financing are the equity and are contributions made ??by members that the entrepreneur is in the process of formation and duration; legal reserves, accrued since the law requires and extraordinary, aside free enterprise; and reinvestment of profits forgone by the entrepreneur or not distributed to shareholders.

The capital has the following characteristics:

It is a venture capital because the company uses it to cover losses and in case of failure is used to cover any debts (Parrino, Kidwell, 2009, 99);

it is not dated, since it remains bound to the company for its entire duration;

It does not involve the obligation of remuneration as the company owes nothing to the shareholders in return for their investment.

External financing (debt capital) funds are borrowed by others. According to their duration are distinguished (Brealey, Myers, 1991, 34): Short-term (not longer than 1 year); Medium-term (1 to 5 years); Long-term loans (more than 5 years). The capital credit has the following characteristics:

It is bound for life because the creditor establishes a deadline by which the debtor must repay the loan;

Entails the obligation to pay the loan: the remuneration is through the payment of an interest rate agreed with the creditor;

Is not subject to business risk if only a limited, because if the company fails, creditors are entitled to be reimbursed (Berk, DeMarzo, 2007, 80).

The external funding, in relation to their purpose brings accounts payable which consist of extended payment terms granted by suppliers; Debt financing in loans consist of revenue received and cause the enterprise (loan: loan generally for land purchases).



Bond Issue

Bond issues are corresponding to a loan that can be applied directly to the lenders without the intermediation of banks (Eastaugh, 1987, 537). This is done through the issuance of securities (bonds: fixed or variable income securities issued by listed companies) which may be of three types:

Ordinary

Convertible

With warrants, unlike other bonds are supplemented by a good that warrants giving the holders the right to subscribe for a certain amount of shares, under certain conditions, within a period of time (Kuo, 1989, 40).

Credit Ordinary

More commonly it is known as a credit line because it is based on trust between bank and customer (Adair, 2006, 80 ). The banks do not grant the credit to anyone, but only those that offer adequate security. If the bank certifies that the company is in the right conditions for granting the loan, then it will determine the form, amount and ...