Investition & Finanzierung

Question 1

Was gehört zum Bereich Corporate Finance (Unternehmensfinanzierung)?

Answer 1

• Unternehmenswerte
• Investitionsrechnungen
• Mergers und Akquisitions, also Transaktionen im Unternehmensbereich
• Kapitalstruktur und Dividendenpolitik
• Beteiligungsfinanzierung
• Projektfinanzierung
• Going public
• Finanzierung von Unternehmenskäufen
• Unternehmenssanierungen

Question 2

Wie wird Rentabilität unterteilt?

Answer 2

• Eigenkapitalrentabilität, welche sich aus dem Verhältnis zwischen Gewinn und Eigenkapital ergibt.
• Gesamtkapitalrentabilität. Zu dieser Kalkulation gehören auch die Zinsen für das Fremdkapital und das Fremdkapital selbst. Die Formel ist: Gewinn + Fremdkapitalzinsen) : (Eigenkapital + Fremdkapital).
• Umsatzrentabilität wird ermittelt aus dem Gewinn im Verhältnis zum Umsatz.
• Es gibt meist noch weitere Rentabilitätszahlen, die individuell für jedes Unternehmen errechnet werden.

Question 3

Welche Möglichkeiten zur Finanzierung des Kapitalbedarfs stehen zur Verfügung?

Answer 3

• Der Gewinn wird für weitere Anschaffungen eingesetzt
• Beschaffung von Fremdkapital mithilfe eines Kredits
• Beschaffung von Eigenkapital mittels Verkauf von Unternehmensanteilen
• Kreditaufnahme mit kurzfristiger Laufzeit
• aktuelle Liquidität im Unternehmen

Question 4

How do you evaluate the value of a company?

Answer 4

Asset-based (“bricks and mortar”)
Ratio-based (“house next door”)
Discounted cashflow (included inflation and interest rates)

Question 5

What are relevant parameters to evaluate an investment opportunity?

Answer 5

Share

Growth
Earnings per share / P.E. (Price per one year’s earnings per share) (profit loss-based)
Price to book (asset-based)
Enterprise value (market capitalization & debt) / EBITDA
P.E.G. (Price/current P.E. ratio to/against earnings growth)
Income
Dividends
Yield
Cover
Perks

Question 6

Was sind Gründe für eine Kapitalerhöhung?

Answer 6

1. Das Unternehmen braucht frisches Kapital, weil es eine Übernahme plant oder Geld für Investitionen benötigt, die Kapitaldecke dafür aber zu gering ist.
2. Das Unternehmen hat Schulden, die es tilgen muss.
3. Das Unternehmen setzt auf Wachstum und möchte durch die Ausgabe neuer Aktien eine breitere Anlegerschaft erreichen.

Question 7

Was sind Gründe für eine Kapitalherabsetzung?

Answer 7

Eine Kapitalherabsetzung findet dann statt, wenn Kapital an Anteilseigner zurückgezahlt werden soll, wenn das Grundkapital durch einen Verlustvortrag verringert werden muss oder wenn es zu Sanierungsmaßnahmen kommt, bei denen auf die Kapitalherabsetzung eine Kapitalerhöhung folgt.

Question 8

Was sind Arten der Kapitalerhöhung einer GmbH?

Answer 8

1. Zuführen von neuem Kapital: Bei der ordentlichen Kapitalerhöhung schießen die Gesellschafter neues Kapital zu. Die Zuführung kann durch Barkapital oder durch Vermögensgegenstände erfolgen. Im letzten Fall wird auch von „Sachkapitalerhöhung“ gesprochen.
2. Umwandlung von Rücklagen: Eine GmbH kann Rücklagen in Eigenkapital verwandeln und diese somit erhöhen. Da die Rücklagen ohnehin schon den Gesellschaftern gehören, ergibt sich in der Regel keine neue Kapitalverteilung bei dieser Form der Erhöhung.
3. Kapitalerhöhung durch Geschäftsführer: Im Gesellschaftsvertrag kann definiert werden, dass die Geschäftsführer einer GmbH das Eigenkapital bis zu einer gewissen Grenze eigenmächtig erhöhen dürfen. Diese Kapitalerhöhung kann zum Beispiel notwendig sein, um neue Mitarbeiter einzustellen oder in neue Maschinen zu investieren.
4. Mischformen: Je nachdem, welche Ziel verfolgt werden, sind auch Mischformen der Kapitalerhöhung bei GmbHs zulässig.

Question 9

Was ist der Leverage-Effekt?

Answer 9

Als Leverage-Effekt (Hebeleffekt) nennt man die Erhöhung der Eigenkapitalrendite durch die Aufnahme von Fremdkapital für eine Investition. Die ist möglich, wenn die Renditeerhöhung durch die Kapitalaufnahme größer ist als die entstehenden Kosten.

Question 10

What is divestment?

Answer 10

In finance and economics, divestment or divestiture is the reduction of some kind of asset for financial, ethical, or political objectives or sale of an existing business by a firm. A divestment is the opposite of an investment. Divestiture is an adaptive change and adjustment of a company’s ownership and business portfolio made to confront with internal and external change

Question 11

What are motives of firms for divestitures?

Answer 11

1) A firm may divest (sell) businesses that are not part of its core operations so that it can focus on what it does best. For example, Eastman Kodak, Ford Motor Company, Future Group and many other firms have sold various businesses that were not closely related to their core businesses.

2) To obtain funds. Divestitures generate funds for the firm because it is selling one of its businesses in exchange for cash. For example, CSX Corporation made divestitures to focus on its core railroad business and also to obtain funds so that it could pay off some of its existing debt.

3) a firm’s “break-up” value is sometimes believed to be greater than the value of the firm as a whole. In other words, the sum of a firm’s individual asset liquidation values exceeds the market value of the firm’s combined assets. This encourages firms to sell off what would be worth more when liquidated than when retained.

4) Divesting a part of a firm may enhance stability. Philips, for example, divested its chip division - NXP - because the chip market was so volatile and unpredictable that NXP was responsible for the majority of Philips’s stock fluctuations while it represented only a very small part of Philips NV.

5) Divesting a part of a company may eliminate a division which is under-performing or even failing.

6) Regulatory authorities may demand divestiture, for example in order to create competition.

7) pressure from shareholders for social reasons (sometimes also called disinvestment). Examples include disinvestment from South Africa in the former era of apartheid (now ended), disinvestment from Israel due to the occupation of the Palestinian territories, disinvestment from Russia due to the 2022 Russian invasion of Ukraine and calls for fossil fuel divestment in response to climate change

Question 12

What is Debt-to-Equity ratio?

Answer 12

A ratio that is used to evaluate a company’s financial leverage and is calculated by dividing a company’s total liabilities
by its shareholder equity.

Debt-to-equity (D/E) ratio compares a company’s total liabilities with its shareholder equity and can be used to assess the extent of its reliance on debt.
D/E ratios vary by industry and are best used to compare direct competitors or to measure change in the company’s reliance on debt over time.
Among similar companies, a higher D/E ratio suggests more risk, while a particularly low one may indicate that a business is not taking advantage of debt financing to expand.
Investors will often modify the D/E ratio to consider only long-term debt because it carries more risk than short-term obligations.

Question 13

What is Acquisition Financing?

Answer 13

Acquisition financing is the funding a company uses specifically for the purpose of acquiring another company.

By acquiring another company, a smaller company can increase the size of its operations and benefit from the economies of scale achieved through the purchase.

Bank loans, lines of credit, and loans from private lenders are all common choices for acquisition financing.

Other types of acquisition financing including Small Business Association (SBA) loans, debt security, and owner financing.

Question 14

What is CAPM?

Answer 14

The Capital Asset Pricing Model (CAPM) is a model that describes the relationship between the expected return and risk of investing in a security. It shows that the expected return on a security is equal to the risk-free return plus a risk premium, which is based on the beta of that security.

The CAPM formula is used for calculating the expected returns of an asset. It is based on the idea of systematic risk (otherwise known as non-diversifiable risk) that investors need to be compensated for in the form of a risk premium. A risk premium is a rate of return greater than the risk-free rate. When investing, investors desire a higher risk premium when taking on more risky investments.

Question 15

What’s the difference between the Buy and the Sell Side?

Answer 15

Buy-Side vs Sell Side. The Buy Side refers to firms that purchase securities and includes investment managers, pension funds, and hedge funds. The Sell-Side refers to firms that issue, sell, or trade securities, and includes investment banks, advisory firms, and corporations. Sell-Side firms have far more opportunities for aspiring analysts than Buy-Side firms usually have, largely due to the sales nature of their business.

When talking about investment banking, it is important to know the difference between the buy-side and the sell-side. These two sides make up the full picture, the ins and outs of the financial market, and both are indispensable to each other:

Buy-Side – is the side of the financial market that buys and invests large portions of securities for the purpose of money or fund management.

Sell-Side – is the other side of the financial market, which deals with the creation, promotion, and selling of traded securities to the public.

Question 16

What characterizes the optimal capital structure?

Answer 16

A company’s capital structure consists of debt and equity, and it is how a business finances its daily operations and growth plans. The capital structure can be a combination of common and preferred equity and short-term and long-term debt.

A company’s total cost of capital is known as the weighted average cost of capital (WACC) and is a weighted average of the cost of debt and the cost of equity. The optimal capital structure is the one that results in the lowest WACC.

Question 17

What are the characteristics/(dis)advantages of equity and debt?

Answer 17

Equity represents ownership and is costlier than debt, but it has advantages that make it suitable for particular types of businesses. Because it is ownership, it gives rights to future company earnings.

However, equity does not need to be paid back if the company’s earnings decline or stop altogether. Small-business owners usually like to issue debt because it allows them to maintain ownership of their business. There are also tax benefits that make it an attractive option for companies.

Question 18

What is equity investment in a company?

Answer 18

Equity investing is done by offering shares of a corporation, adding additional partners to a partnership, or adding new members to a limited liability company. Because these positions represent ownership, it is usually costlier for a company to raise equity than it is to issue debt or take out a loan. However, if a company is already consumed with large amounts of debt, this could be the best solution to keep its debt-to-equity ratio at optimal levels.

Business owners must carefully monitor how much equity they give away because they do not want to relinquish control over the business.

Question 19

What is a shareholder loan?

Answer 19

A shareholder loan is financing provided to a company by its shareholders and represents debt for the business. Although shareholders are tied to the company, the Internal Revenue Service advises that shareholder loans must be given with the same terms that would exist in a loan between two independent parties. This includes having a fair market value interest rate.

A company can write off the shareholder loan interest payments, which is a benefit of going this route. However, if the interest rate charged is below fair market value, the difference between the two is considered income and taxed accordingly.

A shareholder’s Loan is a quick and more flexible form of financing that the companies might raise if they cannot afford external debt or don’t have the time to do so. Further, it is also a cheaper form as, at times, no interest is charged, and it acts as a long-term cushion when sanctioned for an indefinite period. However, the lender and borrower need to be cautious about its tax consequences and the formalities related to the same because the IRS keeps a close watch on such financing for an tax evasion
practices.

Question 20

How are shareholder loans used?

Answer 20

1 – Working Capital

At times the companies require quick financing for their working capital requirements. For this reason, it may go into a shareholder’s loan format because it needs regularly and that too at a snap of the fingers; otherwise, its day-to-day operations are hampered. An example is the loan agreement between eBay PRC Holdings (Bvi) Inc. and Tom Online Inc., dated December 20, 2006, as per the archives of SEC.

At times the purpose of the Loan is not specified because there isn’t anyone particular use for the funds. For example, a company might need additional funds. Therefore instead of raising more equity, it prefers debt capital, and therefore instead of going to an outside lender, it asks for the same from its shareholders.

After being confident about the current product line, a business may want to expand into a new geographical region or may wish to add another product line, so it might want to raise further funds. Again, a shareholder’s Loan might be a more suitable option because, most times, it comes with lower strings attached; that is, the loan period is indefinite, or there might be no interest on the same. An example is the loan agreement between Kunekt Corporation and Mark Bruk, the sole shareholder
of Kunekt, effective as of October 1, 2007, as per the archives of SEC.

At times the company wants to pay off an old debt because it had taken at a higher rate of interest or more restrictive terms and conditions; for this purpose, it requires funds, and therefore it raises a shareholder’s Loan, which it might be able to negotiate at a better rate or maybe at the current market rate, which is lower than the old rate. Still, the company doesn’t want to wait longer to go to an external lender.

Question 21

How does shareholder loan affect taxes?

Answer 21

When the shareholder’s Loan is at an interest rate lower than the market rate or the rate published by the Internal revenue Service (IRS), such a loan is known as a below-market loan.

The difference between the interest paid and that it should be paid according to the market rate is considered an income for the company, and therefore it is taxable.

However, the interest differential is not taxable if the loan amount is $10000 or lower.

Question 22

What is the multiples approach?

Answer 22

The multiples approach is a comparables analysis or relative valuation method that seeks to evaluate similar companies using the same standardized financial metrics.
Enterprise value multiples and equity multiples are the two categories of valuation multiples.
Commonly used equity multiples include P/E multiple, PEG, price-to-book, and price-to-sales.

Question 23

Why is cost of capital important?

Answer 23

The cost of capital measures the cost that a business incurs to finance its operations. It measures the cost of borrowing money from creditors, or raising it from investors through equity financing, compared to the expected returns on an investment. This metric is important in determining if capital is being deployed effectively.

Question 24

What is WACC?

Answer 24

Many companies use a combination of debt and equity to finance business expansion. For such companies, the overall cost of capital is derived from the weighted average cost of all capital sources. This is known as the weighted average cost of capital (WACC).

Question 25

What is the difference between cost of capital and discount rate/hurdle rate?

Answer 25

The two terms are often used interchangeably, but there is a difference. In business, cost of capital is generally determined by the accounting department. It is a relatively straightforward calculation of the breakeven point for the project. The management team uses that calculation to determine the discount rate, or hurdle rate, of the project. That is, they decide whether the project can deliver enough of a return to not only repay its costs but reward the company’s shareholders.