1. DEBT VERSUS EQUITY DECISION FORMAT AN APPLICATION OF FINANCIAL STRUCTURE THEORY

2. BASIC FORMS OF CAPITAL INTERNAL - RETAINED EARNINGS EXTERNAL –DEBT –PREFERRED STOCK –COMMON STOCK

3. BASIC TRADEOFF FINANCIAL RISK AND RETURN BY USING RELATIVE AMOUNTS OF DEBT AND EQUITY SECURITIES

4. RISKS BUSINESS RISK - FUNCTION OF OPERATIONAL DECISIONS FINANCIAL RISK - DERIVED FROM FIXED FINANCING CHARGES

5. BUSINESS RISK (using cash flow format) DEMAND VARIABILITY SALES PRICE VARIABILITY INPUT PRICE VARIABILITY OPERATING REVENUES FIXED OPERATING COSTS (DOL)

6. BASIC CHARACTERISTICS OF THE FINANCING OPTIONS REVIEW TEXT PP. 101-102

7. FRICTO F - FLEXIBILITY R - RISK I - INCOME C - CONTROL T - TIMING O- OTHER

8. INCOME ANALYSIS MINIMAX COMPANY - TABLES 10.2, 3 EBIT/EPS -MEASURE OF INCOME GRAPHICAL DESCRIPTION - FIGURE 10.1 EPS EQUIVALENCE POINT - TABLE 10.4

9. “HIDDEN COSTS” BALANCES “EXPLICIT” INCOME EFFECT ALSO REFERRED TO AS JOINT COSTS –FLEXIBILITY –RISK –TIMING

10. FLEXIBILITY “ABILITY TO RESTRUCTURE INTERNAL FUNDS AND RAISE NEW FUNDS IN A CRISIS” “BUMP IN THE DARK” DEBT RATIOS CAN BE EMPLOYED TO QUANTIFY ACCEPTABLE FLEXIBILITY

11. TIMING TWO MAJOR QUESTIONS: –1. SEQUENCING OF DEBT AND EQUITY –2. FOR DEBT, WHETHER TO FINANCE WITH SHORT TERM OR LONG TERM DEBT

12. CONTROL TYPICALLY FAVORS DEBT FINANCING DUE TO VOTING RIGHTS ISSUE MUST RECOGNIZE ROLE OF COVENANTS AS CONTROL ISSUE IN DEBT FINANCING THRESHOLDS OF CONTROL