Long Term Financing
2 likes1,735 views
Long term financing refers to borrowing expected to be fully repaid over a period exceeding one year, including bank loans and equity instruments, aimed at strategic capital projects or business expansion. Advantages include aiding long-term objectives, managing assets, and supporting investor ownership, while disadvantages involve strict regulations, high leverage risks, and potential bankruptcy from non-repayment. Key data is presented on market capitalization, net profit, sales, and debt for companies like TCS, Infosys, Wipro, and Tech Mahindra.
Long Term Financing
- 2. Long Term Financing Long Term Financing is a type of borrowing that is expected to be fully paid over one year period (such as bank loans, bonds, leasing and other forms of debt finance), and public and private equity instruments. The fundamental principle of long term finances is to finance the strategic capital projects of the company or to expand the business operations of the company.
- 3. Sources of Long Term Financing Source Equity Capital Preference Capital Debenture Term Loans Retained Earning
- 4. Name Market Cap. (Cr.) TCS 844886.94 Infosys 347625.35 Wipro 153086.90 Tech Mahindra 67959.14 60% 24% 11% 5% Market Cap. (Cr.) TCS Infosys Wipro Tech Mahindra Market Capitalization of a Companies
- 5. Net Profit of a Companies Name Net Profit (Cr.) TCS 8131.00 Infosys 3798.00 Wipro 2387.60 Tech Mahindra 959.30 53% 25% 16% 6% Net Profit (Cr.) TCS Infosys Wipro Tech Mahindra
- 6. Sales of a Companies Name Sales (Cr.) TCS 38172.00 Infosys 21803.00 Wipro 14786.00 Tech Mahindra 8653.00 46% 26% 18% 10% Sales (Cr.) TCS Infosys Wipro Tech Mahindra
- 7. Debt of a Companies Name Debt of a Companies (Cr.) TCS 33.00 Infosys 00.00 Wipro 5074.20 Tech Mahindra 4.30
- 8. Advantages of Long Term Financing Helpful for setting up the long term capital objectives of the company. Effectively manages the Asset-Liability position of the organization. Provides long term support to the investor and the company for building synergies. Opportunity for equity investors to take controlling ownership in the company. Flexible repayment mechanism. Debt diversification. Growth & expansion.
- 9. Disadvantages of Long Term Financing Strict regulations laid down by the regulators for repayment of interest and principal amount. High gearing on the company which may affect the valuations and future fundraise. Stringent provisions under the IBC Code for non-repayment of the debt obligations which may lead to bankruptcy. Monitoring the financial covenants in the term sheet is very difficult.
- 10. Thank You!