This website uses cookies to ensure you have the best experience. Learn more

What Are The Advantages And Disadvantages For American Semiconductor To Forgo Their Debt Financing And Take On Equity Financing?

772 words - 3 pages

American Semiconductor, Inc. is a relatively new business that "provides custom and standard processing services to fabless and IDM companies and researchers." With the deregulation of certain markets and increasing environmental concerns, the company operates in a rapidly changing business environment. The prospects of American Semiconductor's products are frequently reviewed, as with any organization, and the company's strategy is constantly analyzed. Therefore, the business decided to relinquish their debt financing and acquire equity financing; a decision that is not advantageous for a privately owned organization unless the owner wishes to give up total control of the business.Currency is the necessary means for every person to achieve something new. To begin business, money is required. Financial support is paramount for all types of company expenses such as rent, employee salaries, purchase of new equipment and other parallel expenses. This is often established in all new companies, but the corporations that are previously in existence involve financing to expand the business activities, refurbish the offices or factories or to invest in new profit producing ventures. Most companies can increase funds either by owing money or selling the equity, conditional on a range of criteria.Debt financing represents any type of borrowing with a guarantee to reimburse the borrowed sum over a particular period of time in addition to interest payments. Accordingly, a company will take out a loan in some type from a lending institution and then the company can use the money on loan for any principle required by the company, and in response the lender will expect the debtor to make the payments along with the interest in a particular period of time.Furthermore, debt financing means money that anybody owes to someone. The person who lends the money is only concerned about the correct and timely repayment of the debts. Usually this sort of financing occurs with the banks and the small business units. The basic advantages of debt financing are that the owner maintains maximum control over the business and the interest of the debt financing is tax deductible. There are some disadvantages also; too much debt can cause problems if the dependence on such type of financing is more than what is required, allowing a situation to develop where there will be not much revenue left to pay back the loan.Equity...

Find Another Essay On What are the advantages and disadvantages for American Semiconductor to forgo their debt financing and take on equity financing?

Tiffany's Equity financing Essay

1720 words - 7 pages . Chew, 2001). At the moment there are some indications that there is a great demand of four times the issuing shares and that two investors have shown great interest to buy approximately 0.5 million shares.Furthermore the equity markets seem somewhat volatile at the end of April after an impressive upward. It is a fact that the prices had recovered from their bearish levels and the market tends to become bullish (Exhibit 7). This is an advantage for

International Business What are the advantages of outsourcing? What are the disadvantages of outsourcing? Discuss why these are advantages and disadvantages and to whom

652 words - 3 pages over to some other external party.""Thus before a company decides to outsource its business process, it must examine allthe factors carefully. It may not happen that outsourcing becomes a reason for companyto regret later."In closing there are pros, and cons, advantages and disadvantages of outsourcing, but itcannot be ignored. The pros, most economists are sure that this condition is justtemporary one and will die down as conditions develop and

What are the advantages and disadvantages of the paperless office?

509 words - 2 pages will begin to see more and more documents being on CD-ROM and also on the Internet. The CD-ROM's are cost effective, paper reducing, and easy to manufacture.In the near future what will probably happen is that publications will be produced in both paper and in some type of electronic media. I see sort of phasing, similar to that if the cassette tape going to the compact disc. For the meantime most everyone has gone the way of compact discs, but there are still the ones who prefer cassette tapes for whatever reason. For this reason I don't think we will see the deletion of printed books, but we will begin to see more and more on some type of electronic media.

What Are the Advantages and Disadvantages of Telling a Lie?

800 words - 4 pages . In spite of advantages of telling a lie, there are several disadvantages too. First, telling lies helps to conceal bad news and avoid negative reaction from others, including punishment. For example, children lie not to make parents angry. According to Michael Brody, M.D., a child psychiatrist in Potomac, Maryland, if a child breaks a vase, and when you ask who has broken the vase, the child can tell a lie. In addition, Dr. Brody says, "If you

What are the advantages and disadvantages of an IQ test

734 words - 3 pages differ from achievement tests in that IQ are not dependent on formal learning acquired at school or at home. Test creators strive to develop IQ instruments that are culture-free, although this goal may be unattainable in a multicultural society such as ours.There are many advantages and disadvantages to the IQ tests. (Sattler, 1992). The IQ has a larger range of correlation that provides the amount of success in a wide variety of human

What are the Advantages and Disadvantages of Area Approaches to Tackling Poverty and Deprivation?

1703 words - 7 pages What are the advantages and disadvantages of area approaches to tackling poverty and deprivation? By Lauren Wright, word limit 25000 words Poverty and deprivation remains a vast problem in the United Kingdom, charity Oxfam (2013) reveals that 1 in 5 households are living under the poverty line making daily life a struggle. The UK government has implemented area-based approaches in order to tackle poverty and deprivation since the 1960s, these

What are the prime sources of Working Capital Financing?

610 words - 3 pages . So, the significance of working capital financing is a must to know factor. There are two types of sources available for working capital financing i.e. Short term and long term. Most of the financing options described below, have a look. • Factoring: This is the traditional source of short term funding for the growing businesses in their deprived situations. To chase outstanding invoices from customers as well as recovering from a loss of

What are advantages and disadvantages of animal testing?

1251 words - 6 pages Introduction Each year in USA laboratories more then 100 million animals are burned, poisoned and lamed (Top 5 Shocking Animal Experimentation Facts). Each year scientists use animals in order to progress, to improve life of people and animals. However, many testing animals suffer and die. But others do not agree and support the fact that we should use animals because of advance. So what are advantages and disadvantages of using animals? This

What Are the Advantages and Disadvantages of Migration in Rio de Janeiro?

1074 words - 5 pages Name: Mergembaeva Gulaiym Grade: 11”E” Teachers: Mr.Bekzhan and Mr.Brian Title: What are the advantages and disadvantages of migration in RIO DE JANEIRO? Introduction Known as the marvelous city, Rio de Janeiro is a destination for migrants, as domestic and as foreign. According to Brookings institute Global cities initiative , 16% of metro Rio residents were born abroad. More than half of those are from Portugal, Italy and Spain. The 2010

MANAGEMENT BY OBJECTIVES How does MBO complement the planning function of management? What are its advantages and disadvantages? What are your conclusions on its use

1349 words - 5 pages -control' on the basis that they have a clear idea of what is expected of them in the form of objectives that they participated in setting.When implemented effectively (which is problematic in itself; discussed later) MBO has definite advantages for an organisation. A major one relates to goal congruence and the fact that all employees' efforts are geared towards achieving certain objectives that have been determined to be the most positive for the

Outline and describe the three major ways of organizing a city government? What are the advantages and disadvantages of each?

604 words - 2 pages Outline and describe the three major ways of organizing a city government? What are the advantages and disadvantages of each?Council ManagerVotersCouncilMayorCity ManagerCity DepartmentsStrong Mayor CouncilVotersCouncilMayorCity DepartmentsWeak Mayor CouncilVotersCouncilMayorTreasurerClerkCity DepartmentsA city with a council manager style government is the most popular among Michigan cities. This type of government allows for the citizens to

Similar Essays

Comparing Debt Financing And Equity Financing

1440 words - 6 pages capital; the capital is not being used advantageously as leverage for obtaining cash" (Financing Basics, 1). A low amount of equity shows that the owners are not committed to their own business. They do not want to make the important decisions that could have a big and lasting effect on their own. Now I will discuss the pros and cons of the alternative decision, which is a combination of the debt and equity methods. A positive of

Evaluating The Risks Involved In Equity And Debt Financing

2053 words - 9 pages Firms around the world rise funds in the capital markets to finance their expansion, acquisitions and other operations. This is usually done through equity and/or debt financing. Equity financing is the process in which a firm raises capital through the sale of shares. Debt financing involves the firm borrowing through, for example by issuing bonds. The firm‘s decision on how to rise capital influences its capital structure and as a result may

Debt Versus Equity Financing Paper

885 words - 4 pages action, making that particular decision advantageous for them.Advantages of Debt FinancingSome of the advantages of debt financing are (a) maintaining ownership, (b) tax deductions, (c) lower interest rates and (d) return on common stockholders' equity may be higher. Through debt financing ownership of the business remains the same, the lender does not gain ownership interest in the business and business obligations are limited to repayment of the

Debt Versus Equity Financing Paper

751 words - 3 pages takeover from competitors and other businesses. At times one financing on either forefront can seem to have more advantages then the next it is important the a business tries to utilize both in order to maintain balance and control of the business for optimal success. ReferencesEntrepreneur. (2014). Debt Financing. Retrieved from (2013). Equity Financing. Retrieved from, C. (2013). What Are Examples of Equity Financing? Retrieved from