financial decision:

dividend decision, investment decision, fiancial management

and risk management

fianncial management: capital MIX structure

source of fiannce (equity, debt, lease finance, venture capital, angel fund, private equity, asset securitsation and Islamic finance)

benefit and deficiencies

factors need to consider about the structure of finance:

1. cost and benefit (by investors and company side)

shares:  for investors more risky 

             for company  more expensive  for investor ask for higher returen

 equity: for company cheaper but more risky

impacts:

ratio, level 

WACC

financing decisions:

investment decision 

dividend decision

fiannce dicision mixture of capital, sourcing to finance peojects with NPV positive

fiancial gearing:

tranditional theory:  with introduce debt, the WACC (cost of capital) will fall, because initial banefit of cheap debt, which lead to arrive the structure in which the minimal cost of capital is accieved. but with the rise of more debt, the riske increased, which outweight the benefit of cheap debt and cause the cost of capital rise.

debt :cheap and pull down the WACC   but  liquidision problem and more risk

equity :WACC will rise and more chance to take higher risk and higher returen projects expensive 

key issues: scenario focus

pecking order theory:optimal gearing rate

size ,

risk and returen investors

current gearing

security

other factor : ta agency cost , control 

islamic finance: manage fee instead of penity or interest 

forms: 

     murabaha= loan

     Ijara  = leasing finance

     sukuk =bond

    Mudaraba=share capital

   musharaka=venture capital

   salam= forward contract