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Financial Growth: Debt, Equity, and Cash Flow

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Before starting this self study program, please go through the instructional document.

Overview

  • End game of the business model
    3 mins
  • The three bucket of profits: Seed stage
    15 mins
  • Working with bankers
    44 mins
  • Other SBA programs
    55 mins
  • Simple agreement for future equity (SAFE)
    73 mins
  • Stock purchase agreement
    91 mins

Course Description

The fuel for growth in a business is cash. 

Cash can be generated both from operations of the business, as well as external sources of debt and equity financing. 

Managing the various options for finding the cash needed to support growth can be quite daunting.

Established players can often use the cash flow they generate from sales of their products, services, or advertising to fund growth.

The second method of financing growth is equity. Equity is the sale of stock in the company in return for cash.  Equity can be common shares or preferred shares.  Preferred shares have priority for receiving cash distributions and usually convert to common shares once the priority obligations are met.

The third option for financing growth is debt. Debt is a loan from a bank, venture lender, private equity firm, corporation, or individual.  Debt accrues interest that must be paid monthly, quarterly, annually, or at maturity.  The principal must also be repaid periodically or at maturity.

Equity should be used for financing when the risk of not being able to service debt is high. The greater business risk makes equity the better choice for financing.

If you can’t repay, don’t borrow! 

Debt financing is a sound financing option when you know can pay back both interest and principal.  You don’t need to have positive cash flow, just enough cash available to pay the interest and amortize the principal over the life of the loan.

This CPE course examines the various sources of cash flow to support the growth of a business and explains the best use of each of the various specific options.

Learning Objectives

  • To analyze the role that cash flow, debt, and equity each play in funding a business during growth.
  • To discuss the steps to building a good relationship with a banker and understand why it is important.
  • To recognize the difference in short- and long-term debt financing.
  • To identify which type of equity financing is best for different financing needs.

Who Should Attend?

  • Accountant
  • Accounting Firm
  • CPA (Industry)
  • CPA - Mid Size Firm
  • CPA - Small Firm
  • Finance Pros
  • Staff of Accounting Firm
  • Young CPA