All businesses need to raise finance to run a business

Jun 27th, 2015
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Abilene Christian University
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The sources of equity (owners’) funds are: 1. Internal Reserves: Profits earned may be kept aside and used for short term or long term investment needs. This is part of the existing equity of the company. 2. Fresh Equity: When investors buy shares of a company they increase the equity funds available to the company.

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Foreign risk exposureChinas economy has been expanding and is projected to grow on a sustainable basis and with this, disposable income per capita will also rise. In fact, the Chinese National Bureau of Statistics reported that annual per capita disposable income of urban residents increased by 11.3% in 2010 compared to 2009, while rural residents disposable income grew by almost 15%. SM are spending Php9.0 billion in 2011. Of this amount, Php4.5 billion (US$100.0 million) will be from the proceeds of the equity placement done by SM Prime last October 2010, and the balancewill be from long-term debtForeign Currency RiskThe Groups exposure to foreign currency risk arises as the Parent Company and SM Prime have significant investments and debt issuance which are denominated in U.S. dollars. To manage its foreign exchange risk, stabilize cash flows and improve investment and cash flow planning, the Group enters into foreign currency swap contracts, foreign currency call options, non-deliverable forwards and foreign currency range options aimed at reducing and/or managing the adverse impact of changes in foreign exchange rates on financial performance and cash flows.As of December 31, 2010 and 2009, approximately 46.4% and 48.9%, respectively, of the Groups total consolidated bank loans and debt were denominated in US dollars. Thus, a strengthening of the Philippine peso against the US dollar will decrease both the principal amount of the foreign currency

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