Fundamentals of Corporate Finance Third edition Chapter 13 An Overview Brealey Myers Marcus of Corporate Financing ndamentals of Corporate Finan Brealey Myers Marcus slides by Matthew will IrwinMcGraw-Hill CThe McGraw-Hill Companies, Inc, 2001
©The McGraw-Hill Companies, Inc.,2001 13- 1 Irwin/McGraw-Hill Chapter 13 Fundamentals of Corporate Finance Third Edition An Overview of Corporate Financing Brealey Myers Marcus slides by Matthew Will Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc.,2001
13-2 Topics Covered COmmon stock PReferred Stock COrporate Debt cOnvertible securities PAtterns of Corporate Financing Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001
©The McGraw-Hill Companies, Inc.,2001 13- 2 Irwin/McGraw-Hill Topics Covered Common Stock Preferred Stock Corporate Debt Convertible Securities Patterns of Corporate Financing
13-3 Common stock Treasury Stock Stock that has been repurchased by the company and held in its treasury Issued shares Shares that have been issued by the company Outstanding Shares Shares that have been issued by the company and by investors held by Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001
©The McGraw-Hill Companies, Inc.,2001 13- 3 Irwin/McGraw-Hill Common Stock Treasury Stock Stock that has been repurchased by the company and held in its treasury Issued Shares Shares that have been issued by the company. Outstanding Shares Shares that have been issued by the company and held by investors
13-4 Common stock Authorized Share Capital Maximum number of shares that the company is permitted to issue, as specified in the firms articles of incorporation Par value Retained earnings Value of security Earnings not paid out shown on certificate as dividends Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001
©The McGraw-Hill Companies, Inc.,2001 13- 4 Irwin/McGraw-Hill Common Stock Authorized Share Capital Maximum number of shares that the company is permitted to issue, as specified in the firm’s articles of incorporation. Par Value Value of security shown on certificate. Retained Earnings Earnings not paid out as dividends
13-5 Common stock Book Value vs Market Value Book value is a backward looking measure. It tells us how much capital the firm has raised from shareholders in the past. It does not measure the value that shareholders place on those shares today. The market value of the firm is forward looking, it depends on the future dividends that shareholders expect to receive Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001
©The McGraw-Hill Companies, Inc.,2001 13- 5 Irwin/McGraw-Hill Common Stock Book Value vs. Market Value Book value is a backward looking measure. It tells us how much capital the firm has raised from shareholders in the past. It does not measure the value that shareholders place on those shares today. The market value of the firm is forward looking, it depends on the future dividends that shareholders expect to receive