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    Revision Sources of Finance

    Uploaded by

    Isaack Mgeni
    This document outlines topics and questions for revision on sources of finance, working capital management, dividend policy, and mergers and acquisitions. For sources of finance, it asks about debentures, criteria for business angels and venture capital investment, and short, medium, and long term borrowing. For working capital management, it asks about risks of minimizing net working capital and differences in terminology. For dividend policy, it asks about dividends being irrelevant without taxes, typical stock market reactions to dividend increases, and information in share repurchases. For mergers and acquisitions, it defines mergers, asks about motives in categories, and provides a case study with questions on transaction costs and net gain from a merger.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Revision Sources of Finance

    Uploaded by

    Isaack Mgeni
    66 views2 pages
    This document outlines topics and questions for revision on sources of finance, working capital management, dividend policy, and mergers and acquisitions. For sources of finance, it asks about debentures, criteria for business angels and venture capital investment, and short, medium, and long term borrowing. For working capital management, it asks about risks of minimizing net working capital and differences in terminology. For dividend policy, it asks about dividends being irrelevant without taxes, typical stock market reactions to dividend increases, and information in share repurchases. For mergers and acquisitions, it defines mergers, asks about motives in categories, and provides a case study with questions on transaction costs and net gain from a merger.

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    REVISION

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    This document outlines topics and questions for revision on sources of finance, working capital management, dividend policy, and mergers and acquisitions. For sources of finance, it asks about debentures, criteria for business angels and venture capital investment, and short, medium, and long term borrowing. For working capital management, it asks about risks of minimizing net working capital and differences in terminology. For dividend policy, it asks about dividends being irrelevant without taxes, typical stock market reactions to dividend increases, and information in share repurchases. For mergers and acquisitions, it defines mergers, asks about motives in categories, and provides a case study with questions on transaction costs and net gain from a merger.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    66 views2 pages

    Revision Sources of Finance

    Uploaded by

    Isaack Mgeni
    This document outlines topics and questions for revision on sources of finance, working capital management, dividend policy, and mergers and acquisitions. For sources of finance, it asks about debentures, criteria for business angels and venture capital investment, and short, medium, and long term borrowing. For working capital management, it asks about risks of minimizing net working capital and differences in terminology. For dividend policy, it asks about dividends being irrelevant without taxes, typical stock market reactions to dividend increases, and information in share repurchases. For mergers and acquisitions, it defines mergers, asks about motives in categories, and provides a case study with questions on transaction costs and net gain from a merger.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    REVISION

    SOURCES OF FINANCE

    1. What are the advantages and limitations to a business in using


    debentures?
    2. What criteria do business angels and venture capital firms use when
    deciding whether to invest in a business?
    3. What are the differences between short term, medium term and long term
    borrowing?
    4. What are the various sources of finance for public sector organizations?
    5. What factors do managers need to decide on before choosing their
    sources of finance?

    WORKING CAPITAL MANAGEMENT

    1. Explain why minimising net working capital is considered to be a risky


    policy.
    2. Explain the reasons that John Maynard Keynes suggested individuals (or
    firms) hold cash.
    3. Explain the differences between the following pieces of terminology:
    'working capital management', 'net working capital', and 'gross working
    capital'.

    DIVIDEND POLICY

    1. What does it mean to say that dividends are “irrelevant” in a world


    without taxes or other market frictions?
    2. What do you think is the typical stock market reaction to the
    announcement that a firm will increase its dividend payment? Why?
    3. Briefly explain the information content of share repurchase.

    MERGERS AND ACQUISITION

    1. Define the term “merger” as used in corporate finance


    2. Explain motives for mergers in at least four categories
    3. Alpha Plc plans to acquire Beta Plc. The Present Values (PV) of Alpha
    and Beta are TZS 20,000,000 and TZS 10,000,000 respectively. The
    advisersꞌ fees, underwritersꞌ fees and legal and accounting fees are TZS
    500,000, TZS 500,000 and TZS 1,000,000 respectively. The Value of the
    merged firms is TZS 40,000,000.

    Required:
    1) What is value for the transaction costs?
    2) What is the net gain from merger?

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