CH 9, 10, 11 P1

Capital Structure

A mixture of liabilities and stockholders' equity that a business uses.

Debt Financing

Borrowing money.

Equity Financing

Obtaining investment from stockholders.

Cost of Financing

The cost associated with raising capital, which differs for debt and equity.

Installment Payment

Payment that includes interest on the borrowed amount and reduction of the outstanding loan balance.

Bond

A formal debt instrument issued by a company to borrow money.

Bond Issued at a Premium

A bond whose carrying value decreases over time.

Bond Issued at a Discount

A bond whose carrying value increases over time.

Debt-to-Equity Ratio

The best ratio to measure financial leverage.

Paid-in Capital

The amount stockholders have invested in the company.

Retained Earnings

The amount of earnings the company has kept or retained.

Treasury Stock

A company's own issued stock that has been repurchased.

Angel Investors

Wealthy investors who provide capital, similar to those on the show Shark Tank.

Venture Capital Firms

Firms that provide additional funding and business expertise.

Initial Public Offering

The first time a corporation issues stock to the general public.

Publicly Held Corporation

A corporation that allows public investments and is regulated by the SEC.

Privately Held Corporation

A corporation with no public investment and few stockholders, not regulated by the SEC.