Finance Essay Example | Topics and Well Written Essays - 3000 words

Finance - Essay Example The capital structures of the companies were affected strongly since the availability of debt capital financing as well as equity capital financing declined considerably. Under influence of the financial crunch firms reduced security issuance and financial institutions reduced issuance of loans by a large extent (Fosberg, 2012). Among many consequences, the major consequence faced by the firms was in their capital structure. The defaults of mortgage loans led to significant increase in debt amount of the firm’s capital structure. Results of recent research show that between the years 2006 and 2008 the market debt ratio (MDR) of the firms increased on average by 5.5 percent (Fosberg, 2012). The financial crisis was supplemented by severe recession in the US economy which boosted the soaring market debt ratios of the firms. If the effect of recession is removed then debt accumulation of the firms solely due to the financial crisis has been found to be approximately 5.1 percent ( Fosberg, 2012). This affirms the severity of the effect of the financial crisis on debt accumulation by the corporations and their capital structure. ... n capital structure made by the financial crisis, different factors were adjusted, such as, reduced profitability of the firm that resulted from recession. Although the effects cast by the financial crisis were major, the effects of recession were also huge and put significant effects on the debt capital financing by the firms. This paper evaluates the effects of the crisis critically from the points of view of three most recognized theories of capital structure and provides explanation with the help of real examples of companies that have suffered the impacts of the crisis. Literature Review Brigham and Ehrhardt (2002) explain in their book, Financial Management, that capital structure is one of the important instruments that allow firms to maintain control of its administration. Improper capital structure might be fatal for any organization. Capital structure relates to the various components of the financial policies made by the firms regarding investment activities (Jones, 2011). It is related to bankruptcy risk that high leverage firms might face during financially instable times. While the use of more leverage magnifies returns for equity holders, the downside threat of holding a large amount debt is very high. Therefore, firms should carefully consider their capital structure in their financial policies (Gunay, 2002). Debt financing The proportion of debt financing in the capital structure of a firm differ between firms and also depend on the existing capital structure. The type of debt incurred and the extent up to which the debt is extended are decided by the factors such as the cost of the debt and its availability to the firm. Without taking bonds into consideration, debt financing can be categorized in to two types, namely, financial credits and trade

Marketing and Marketing Strategy Coursework Example | Topics and Well Written Essays - 1000 words

Marketing and Marketing Strategy - Coursework Example The first product that I choose was an automobile. This was a high involvement purchase. This is because the product was expensive and would have a significant impact on my life. Moreover, this was a product that I had to spend a considerable amount of time and also effort searching for. This was also so because there were significant differences between the brands that were available at the time in terms of their performance and quality ("Indmedica - CyberLectures - High Involvement Purchase Decisions", n.d., p. 2). However, the second product that I chose, newspaper, was a low involvement purchase since the product was that which is habitually purchased and therefore the decision of choosing it required very little effort. It was also a low involvement purchase because the newspaper had insignificant effect on my lifestyle and was not that an important investment. 1st Product: Automobile The following are the 5 buying decision process that I followed in buying this product. a) Prob lem recognition This is the stage I realized that I actually needed a car. I would want to conveniently travel to my job place every morning but could not do so as I did not have a convenient means of transport. b) Information search This is where I started looking for what could solve my transport problem. I looked for information on the convenient means that I could use to travel to my workplace and concluded on buying a car. c) Evaluation of alternatives Here, I took into consideration all the car models that were available and which one of them would best fit my needs. I also considered the alternatives that were available for me including their prices and the shops selling them. d) Purchase decision After all the considerations and consultations, I decided to buy a model of my choice. This is where I also walked to the shop that I had chosen and actually paid for the car. e) Post-Purchase evaluation This I did after the purchase. I evaluated the car that I had bought; its impor tance and how convenient having it would be. I also confirmed that I had made the right choice. 2nd Product: Newspaper I only followed two processes for my second low involvement purchase. a) Problem recognition This is where I discovered my need for the newspaper and decided to buy one. b) Purchase evaluation Here, I went straight to the nearest and easily accessible shop and bought the newspaper that I wanted. Question 2 My first purchase was a high involvement purchase and this meant that I had to follow all the processes of consumer purchase. I had to make sure that I had put into consideration all the facts and information concerning the product that would make me chooses the right one. Unlike the first one, the automobile was very expensive and therefore there was no room for mistake in my purchase. This required me to carefully evaluate all the then available alternatives and make a solid decision based on facts considerations. In buying this high involvement product, automob ile, I had to first look for information after identifying my problem. I also had to evaluate all the possible alternatives before making my final purchase. Contrary to this, for the second low involvement purchase, newspaper, I did not have to do a lot. This was a product that I usually bought so I knew what I needed. The only thing that I wanted was a shop that was nearby and a place where I could easily; conveniently and quickly buy the newspaper. For these reasons, unlike