Choosing Between Debt And Equity Finance Essay

Choosing Between Debt And Equity Finance Essay In financial decisions, the choice between debt and equity financing is one of the most difficult ones. Both types of financing have its advantages and disadvantages. Debt financing is based on borrowing finance, and incurs debts that should be repaid in a certain time. The obligations of the company include repaying the loan and paying interest on the loan until its repaid. Debt financing does not impact the ownership of the business, but might cause high debt servicing costs. On the other hand, equity financing represents the exchange of finance to a part of business ownership; this is commonly done by issuing stocks. Equity financing allows to receive investments without additional payments and does not cause financial concern of investors, like debt financing does. However, since the ownership is shared, the owners have to dilute their decisive power (Grossman Livingstone, 2009), and might even lose control of the company. For the companies, the choice of debt or equity financing is based on many factors, such as size of the company, state and dynamics of the industry, perspectives of the company, debt-to-equity ratio, debt servicing costs etc. The purpose of this essay is to consider the decision of American Superconductor Corporation to shift to equity financing from debt financing, made in 2003. AMSC case American Superconductor Corporation is a company providing wind turbine design, electrical control systems, power systems and superconductive wires (Madura, 2008). It operates mostly in Europe, North America and Pacific Asia. Before 2003, the companys investment policy was based on debt financing; however, in 2003, the decision to forgo a secured debt financing and to adopt an equity financing strategy under current market conditions (Esposito, 2003) was made. The company experienced recession in 2003; in October 2002, its stock prices have fallen to the record level of $2.25, and in 2003, they constituted about $3.36, which was very low compared even to 2002 level of $12.26 (AMSC Stock, 2010). The company needed financing, and their choice was to issue a public equity offering instead of debt financing. This decision was explained as strategic solution based on the consequences of 2003 blackouts, and CEO of American Superconductor, Greg Yurek, forecasted an increased need for their power grids and public attention to better voltage support with dynamic reactive power compensation (Esposito, 2003). The results of first six months of fiscal 2004 year seemed to prove the efficient of the decision to pursue equity financing, since no long-term debt was reported, and $17.4 million revenue in the first two quarters of the year. The company also focused on wind turbines, which were gaining popularity. Wind power in 2007, for example, became the first $30B clean energy industry (Madura, 2008). Current financial position of AMSC shows that its total revenue and gross profit values have significantly increased during the last years (2008-2010 financial information available); the companys gross margin is 39.14% compared to 32.19% in the diversified electronics industry in general (AMSC Stock, 2010). The operating margin is also higher: 14.70% compared to 5.71% industrys operating margin, the EPS is also higher (0.64) than 0.08 average (AMSC Stock, 2010). Although the financial position of AMSC is weaker than that of main competitor, ABB. Ltd., the company managed to override another major competitor, SatCon Technology Corporation. The industry provides a significant development potential, and the stocks of the company were not priced less than $10 since 2007 (AMSC Stock, 2010). Analysis of financial decision The combination of debt and equity financing impacts the companys cost of capital. Debt financing is safer for investors, while equity financing is more risky for investors, but at the same time safer for the company (Grossman Livingstone, 2009). Since debt financing creates contractual obligations, the companies should carefully consider their ability to repay the debts. Debt servicing incurs higher costs than equity financing, and if the company experiences fast growth, it might suffer from high debt servicing expenses. It has also been shown that companies with consistent profit operating in low-risk and slowly growing industries more often opt for debt financing, while companies operating in risky and rapidly changing industries as well as in volatile ones, should choose equity financing since these companies have more opportunities for investments, and would not suffer from underinvestment (Grossman Livingstone, 2009). By 2003, AMSC experienced financial problems and its stocks have dropped in price, but the conditions of the environment indicated the quick growth of interest to AMSC production. It could be forecasted that in some time the company would need significant investments and 2003-2004 was the right time to expand. If AMSC continued debt financing, its growth would be hindered by debt servicing costs and worse stock dynamics. Thus, the decision of AMSC to replace debt financing with equity financing was very appropriate in this situation. Conclusion In order to perform the choice of business financing (debt versus equity), it is necessary to consider the perspectives of the company as well as the nature and dynamics of the industry. In 2003, AMSC was experiencing financial difficulties and its stocks have significantly fallen. However, there were many opportunities for development, and the 2003 blackouts increased the interest to AMSC production. Therefore, the company had strong potential for growth, and needed strong financing source without excess cost increase. Thus, American Superconductor Corporation performed a right decision to stop debt financing, and to issue a public equity offering. The correctness of the decision can be also traced looking at further financial development of the company: AMSC is stably growing, creates new products and shows good progress compared to its competitors.

Romeo and Juliet by William Shakespeare :: Romeo and Juliet Essays

Romeo and Juliet by William Shakespeare In this course work I will be seeing how Shakespeare shows Romeo's change of mood in Act 5, Scene 1. I will include what Romeo says and does as well as the audience reaction. I will also talk about Romeo's character in this scene, his visit to the apothecary and what happened to Juliet. By the time this scene is performed, Romeo has been banished from Verona and Juliet. The scene starts with Romeo in Mantua, where he hears the news of Juliet's death. Before he hears the news he is reminiscing a dream he had had the night before (lines 1-11), "I dreamt my lady came and found me dead-Strange dream, that gives a dead man leave to thinkà ¢Ã¢â€š ¬Ã‚ ¦" When Balthasar enters, Romeo is very anxious to hear news from Verona and asks several questions. He even repeats himself, "How doth my lady? Is my father well? How doth my lady? That I ask again, for nothing can be ill if she be well." Unfortunately for Romeo, there is no good word from Verona, only bad, "Her Body sleeps in Capel's Monument.." In hearing this, Romeo becomes aggressive and emotional. He will not wait for anything or anyone to tell him what he should do now. He says, "Is it e'en so? Then I defy you, stars!" Romeo will not wait for the stars to dictate what he should do now. He acts in defiance. Shakespeare uses this line to represent fate or fortune. The audience reaction is not that of shock but of sadness and bereavement for Juliet. There is also a sense of pity for Romeo. Once Balthasar has left Romeo begins to talk to himself. He talks about an apothecary he had seen. He begins to describe it, "And in his needy shop, a tortoise hung, an alligator stuff'd, and other skins of ill shap'd fishesà ¢Ã¢â€š ¬Ã‚ ¦" The mood of the play changes instantly. It becomes dark and evil. Romeos emotions become very clear in line 50. He is deeply depressed and it is evident that he has given up on life, "An

Art and Irony Essay

Dreams are the paints of a great artist, and the world is their canvas. Artists are able to produce beautiful art pieces using their ideas and imaginations. Through art, we are able to communicate stories of tragedy, peace, hardship, and ease. In many ways, visual art and written stories can be compared to one another. Like a frame to a picture, the techniques in a short story help keep the story together. As for the elements they can be seen as the painting itself, providing both story and beauty. Both techniques and elements play crucial roles together. In both short stories â€Å"The Blues Merchant† and â€Å"Rich For One Day†, the influence of the ironic technique towards characterization and theme can be noticeably seen. The use of irony greatly affects the overall theme of the Blues Merchant, like a border to a beautiful painting. We see the theme shift when we see the guard nodding to the rhythm of the Blues Merchant. When confronted by the guard sergeant, he receives the message which is â€Å" You are not supposed to enjoy the blues. You get paid to watch, not to be human† (Washington 284). After this particular even takes place, we see how the Blues Merchant is able to shift the freedom of the guards, and the entrapment of the prisoners. Through the Blues Merchants’ music, the guards are becoming trapped and confined while the prisoners are being able to taste freedom. The ironic technique can be seen when this occurs. The same technique can be seen when the narrator is describing the concert. In the last sentence of the story, the narrator states, â€Å"The guards remain trapped behind the prison walls while, if only for a short time, we are free† (Washington 284). Irony is at play in this sentence because the full transformation of the prisoners and guards is showcased. The theme of the story is reflected through irony, and the irony is shown in this quote. The theme of the story is that music can set you free, and the technique used plays a part by freeing the prisoners. The best paintings are the ones that that tell us stories. The Blues Merchant is able to paint a beautiful story of freedom for the struggling man. The Blues Merchant paints a powerful picture. Not only can an ironic technique affect the theme of a story, but it can also effect the development of characters. We see this take place in â€Å"Rich For One Day†. Aline is girl who seems to be down in fortune, but seems to think otherwise. Aline misjudges her wealth when she remembers that she â€Å" [is] rich today. She [has] eight dollars, a fortune.† (Suzanne 257). The fact that this economically unstable woman finds herself rich with eight dollars is ironic. She tries to convince herself that her own life is a life of luxury and comfort, although in reality, this is not the case. Aline tries to hide and stay away from the harsh truth when we see her â€Å" Not quite awake and that she felt too rich today to give an answer† (Suzanne 257) to the designer calling her about a possible job offer. Considering that Aline is not doing well for herself, she should see to take this job, but instead she refuses to give an answer to the designer. The irony is seen when she says that she is deemed too rich to give an appropriate answer. If she were actually rich, then this statement would not be ironic, but considering she only has eight dollars in her bank account, then her saying that really tells the reader what kind of person Aline really is. Characters in a story are fundamental to a stories success. If an ironic technique is used effectively, the development of such characters can be very fruitful and promising. Authors use many different techniques to transform the core aspects of a story. Artists can use different types of paint, or different bristles to create a desired affect on their work. Both authors and artists alike have been adapting these different ways of expressing their works for the sole purpose of communicating with their audience. Irony has proven to be a useful tool in terms of enhancing a theme of a story, or the development of a character. Imagine what stories and art would be without real purpose. What a story would be without effective technique. A painting without a story, A picture without a frame.

A Summary Of Identification - 1077 Words

Identifying individuals in photographs of animals collected over time is a non-invasive approach for identifying animals that could potentially be dangerous and or for identifying for your own curiosity. This paper describes the design and use of Fuana, the first image retrieval system for individual animal identification incorporating crowd-sourced relevance feedback. Sloops iterative retrieval strategy using hierarchical and aggregated matching and relevance feedback consistently improves deformation,correspondence-based approaches for individual identification across several species. Its crowdsourcing strategy is successful in utilizing relevance feedback on a large scale. Sloop is in operational use. The user experience and†¦show more content†¦Ã¢â‚¬Å"Zebras and tigers can be identified from their stripes; cheetahs and African penguins carry unique spot patterns and snakes have coloured rings† (Burghardt, 2008). â€Å"Photographic identification has been used si nce the 1970s to identify aquatic animals such as dolphins and whales† (Rugh et al., 1998). â€Å"Individual bottlenose dolphins can be identified by comparing photographs of their fins, which display curves, notches, nicks and tears. Whales can be distinguished by the callosity patterns on their heads† (Wells, 2002). Objective: My objective is going to be to develop an application for phones that will identify a species of animals with a picture and or video, that tells you everything you need to know about said animal Hypothesis: My hypothesis is that my app will be new option for identifying animals Materials and Methods: For this project what I am going to do is use image segmentation, image segmentation is the process of partitioning a digital image into multiple segments (sets of pixels, also known as super-pixels). The way I am going to be storing my database and that is in a order of taxonomy, Im going to be creating the database and the app itself using github to code. The goal of segmentation is to simplify and/or change the representation of an image into something that is more meaningful and easier to analyze. 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