The Essentials of Financial Analysis

CHAPTER TWELVELONG-TERM FINANCING

This chapter discusses long-term financing—sources, specific forms, and procedures for obtaining long-term financing. The chapter begins with a review of the financing alternatives in the early stage of a firm’s existence—private placement of debt and equity through to the initial public offering (IPO) phase, where the organization decides to go public for the first time. The common forms of long-term financing include long-term debt, preferred stock, and common stock. Each is presented, in turn, below.

The chief financial officer (CFO) or treasurer of an organization is responsible for making recommendations to the board of directors and chief executive officer (CEO). These recommendations carefully weigh the ...