At the end of this class students should be able to:

Discuss the appropriate uses of the following types of capital

Start-up/venture capital

Working capital

Investment capital

Compare at least THREE advantages and THREE disadvantages of debt and equity financing.

Review the following resources on:

1. Debt vs equity - here and here
2. Forms of debt. Link
3. Forms of equity (capital and shares) - Investopedia.com defines shares as "funds raised by issuing shares in return for cash or other considerations. The amount of share capital a company has can change over time because each time a business sells new shares to the public in exchange for cash, the amount of share capital will increase. Share capital can be composed of both common and preferred shares".Investopedia defines capital as

   Financial assets or the financial 1.value of assets, such as cash. The factories, machinery and equipment owned by a business. View YouTube video here

4. Equity financing. Link
5. Working capital. Link

Question for review

1. Define the term working capital. (2 marks)
2. Identify THREE components of working capital. (3 marks)
3. Buddy is setting up a new gas station and convenience store and requires financing for the following areas:

1. Land and building
2. Machinery and equipment
3. Stock of petrol (gas)
4. Stock for convenience store
5. Wages for employees (for the first week)

Identify the MOST suitable source of finance for EACH of the above areas of the business. For EACH source identified explain why it is the MOST suitable. (20 marks)

Visit my companion student site for the answers.