Chapter 11 Debt & Other Forms of Financing

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Presentation transcript:

Chapter 11 Debt & Other Forms of Financing Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. © THE MAIN PROBLEM Entrepreneur at small, growing (SME=small & medium entrepreneur) do not have easy access to variety of inexpensive funding sources Financial manager of SME are concern about cash flow obligation to supplier, employees, maintaining solid financial The difficulty of attracting adequate funds Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Getting access to funds Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Getting access to funds Start with Internal Sources Home Equity Lines Credit Cards Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. © Cash conversion cycle Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Integrative Approach to Working Capital Management Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

More Payables & Less Receivables Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Choosing the Right Mix of Short-term Financing Obtaining Bank Loans though Accounts Receivables Obtaining Financing from Customer repayments Obtaining SBA-guaranteed Loans Obtaining Loans against Inventory Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©

Planning Cash Flow and Planning Profits Profit is an accounting concept designed to measure the overall performance of the company. Many financial transactions that do not enter into the calculation of profit do enter into cash flow. Some transactions that enter into the determination of profit do not directly enter into cash flows. Free cash flow is equal to the firm’s cash flow from operations minus investments in capital expenditures that are required to maintain the company’s competitiveness. Another term that is becoming more common is “pretax undedicated cash flow.” Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©