Chapter 13 Planning Equity Financing Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Business is organized to achieve certain objectives

Business Strategy

Companies acquire funds from three sources

Two financing categories.

13-6 What is the Risk of Debt Financing?

Debt-to-Equity Ratio

Times Interest Earned Ratio- earnings before interest and taxes divided by interest expense

13-9 What is the Reward of Debt Financing?

Return on Owner’s Equity Ratio

Reward of Equity Financing

Risk of Equity Financing.

Equity Financing.

13-14 What are the Advantages of Sole Proprietorships and Partnerships?

13-15 What are the Disadvantages of Sole Proprietorships and Partnerships?

13-16 What are the Advantages and Disadvantages of Corporations? Advantages Disadvantages

Pro forma Statement of Owners” (Partners) equity

13-18 How do Partnerships Determine how Profits /Losses will be Allocated to the Partners?

Exercises

13-21 What are the Types of Stock Issued by Corporations?

13-22 What are the Most Common Preferences given to Preferred Stock?

13-23 What are the Different “Numbers of Shares” Concerning Stock?

13-24 What is Treasury Stock?

13-25 What are the “Values” Associated with Stock?

13-26 What Types of Dividends are Distributed?

13-27 What are the 3 Dates Associated with Dividends?

13-28 What is the Difference Between a Stock Dividend and a Stock Split?

Exercise 13-10

Exercise 13-13

Exercise 13-14