Business Financing and the Capital Structure Essay - 1

Business Financing and the Capital Structure - Essay Example Working capital is expressed as the difference between the short term assets and the short term liabilities. Inventory turnover, accounts payable, accounts receivables are considered for working capital management by companies. Financial instruments used as marketable securities to park excess cash The financial instruments used to park excess cash by corporations are bonds and debentures. These are marketable securities as it is possible to convert these securities into cash at any point of time due to large number of buyers available in the market. Raising business capital using both debt and equity options in today’s economy Raising business capital is a crucial aspect of decision making by the companies in today’s economy in the context of global economic slowdown. The options for raising business funds are debt financing and equity financing. A corporation may choose to adopt debt financing by acquiring loans from the market. In debt financing, the corporation woul d need to pay regular interests till repayment. However, the corporation has the opportunity to reduce interest payment by available tax shields. Debt financing may be adopted as it does not dilute the ownership structure and decision making of companies. Another option of equity financing by corporations may be used to raise capital by share issues. The cost of equity financing is the payment of dividends to the shareholders (Glen and  Pinto, 1994, p.28). Although the ownership structure is diluted, the corporation also has the opportunity to the share the risk of investments. The profits earned from the investments are also shared among the shareholders of the corporation. Seeking capital from a foreign investor: risk and rewards Business may seek to raise capital from a foreign investor by entering into strategic alliance and joint venture with the foreign investor. In order to gain competitive advantage in the market that would not have been possible through the use of individ ual resources and capabilities, corporations decide to share the technologies and expertise of the foreign investor through strategic alliance. The risk of the business is also shared apart from the rewards and profits of the joint business. The risk attached to the raising of capital from foreign investors includes losses due to mismatch of mutual interests in long term prospects. Due to unexpected changes in the international economy, foreign investors may realize losses and loose interest in the local markets. An example of changes in world markets may be due to fluctuation of the currency conversion rates. This would lead to liquidity crunch for which the consumption level in the economy would fall. Due to this risk factor, the productivity of the corporations would fall leading to fall in profitability of the corporations. Common stocks versus bonds: Historical relationship between risk and return, diversification through portfolio formation The historical relationship between risk and return of an investment could be explained by the theory of risk-return trade off. Higher the amount of risk incurred in an investment, higher would be the expected return. On the other hand, a risk-averse investor would like to incur low risk for which the return would also be moderate.

Outdoor Adventure Activities Essay Example | Topics and Well Written Essays - 1250 words

Outdoor Adventure Activities - Essay Example (Leeuwen, 1996, P. 65) Caving is the act of visiting caves. Cave can be described as natural physical environment in which the rocks are arranged in a way that they appear like houses. Caves have been known as the home of traditional men when they were not civilized enough to construct houses. Caves have become one of the most attractive outdoor activities not only for leisure but also as a way of learning geography of a place and also the history of the people. They are important sites for archaeologist as they try to dig deep into the history of the people. Caves are important place to learn civilization as people go to explore the arts of painting on these caves which tell moir about the civilization of these people. However those who go for caving do so for leisure activity in the sense that they want to have an experience of those gone days. They want to feel link those old people felt when they stayed in the caves. Other just wants to have a relaxing atmosphere where they can relax in quietness with out disturbance in the unusual environment. On the other hand canoeing is a water based activity which involves travelling on the water in a canoe. This activity may be carried out for leisure or for the purpose of travelling. If used for leisure individuals will be c engaging in the activity for fun or for exploring water geography. (Rivkin, 1995, P. 21) Both of the above mentioned activities will have several environmental impacts. This arise form the fact that both outdoor activities involve a form of interaction with the environment. Let us look at each of the issue. Environmental effect of caving During caving there are various instances at which individuals are likely to interfere with the set up of the environment. First many of the caves are located secluded areas which are not always visited by people as a result as people go to these caves they interfere with the natural environmental set up. Fore example if the cave is located in deep forest as is the case with many caves individual are likely to interfere with the set up of natural environment. This may involve clearing of the forest in order to pave way for their entrant into these caves. Therefore tone of the environmental effect that caving may have is that it may lead to clearance of the environment in order to pave way for entrance into these caves. Caves also hold their own economical habitats. Apart from home of flying mammal like bats, they are also home to a variety of insects and other small rodents. Therefore as individuals go caving, there are likely to interfere with the natural life of these animals. This may have an effect of making the animal relocate to other areas which leads to loss to their natural ecology and therefore disruption of the food chain. For those who go caving they are likely to carry foods and other items. If there is no proper disposal of the wastes, it may lead to pollution of the environment. In many cases, some of these wastes may be poisonous to the animals and as they consume tem they may dies. Therefore one of the most serious problems that may be associated with caving is pollution of the environment. There should be a proper waste disposal mechanism should ensure that poisonous materials like