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Topic 6 : Financial Alternative - Coggle Diagram
Topic 6 : Financial Alternative
Debt
Short term financing
Allow company to quick access capital
Better way to overcome momentary liquidity problem
Long term financing
Involve multi-year repayment term
Have stricterlending standards for longer term
Advantages
Maintain ownership
Tax deductions
Lower interest rate
Costs less than equity financing
Drawbacks
Repayment
High rates
Impact on credit rating
Cash and collateral
Financing strategies
Establish the fundamental step of an organization achieve it goals
Matching approach
Conservative approach
Aggressive approach
Equity
Advantages
Committed to business and intend projects
Use the capital for business activities
Explore and execute growth ideas
Valuable skills, contacts and experience
Credit issues gone
Disadvantages
Demanding, cost and time
Comprehensive background information
3.Provide regular information
Potential conflict
Legal and regulatory issues
Share profit
Loss of control
Types
Angel Investor
Venture Capitalists
Crowdfunding
Initial Public Offering