Sources of finance and Financial Strategy

Equity represents ownership capital with no fixed repayment obligation and residual claim on assets, while debt is borrowed capital carrying a fixed interest obligation and priority claim over equity in liquidation.

An over-allotment option allowing stabilisation of post-listing price.

Pecking order theory, proposed by Myers and Majluf, suggests firms prefer internal financing first, then debt, and issue equity only as a last resort due to information asymmetry concerns.

EPS after converting all convertible securities into equity shares.

Modigliani-Miller with corporate taxes shows that debt financing creates a tax shield on interest payments, increasing firm value, implying an optimal capital structure that maximises the tax benefit while balancing financial distress costs.

A single prospectus valid for multiple issues over one year.

The trade-off theory states that firms balance the tax shield benefits of debt against the costs of financial distress and bankruptcy to arrive at an optimal debt-equity mix that maximises firm value.

Selling receivables to a factor at a discount for immediate funds.