Paper Topic:
prin. of finance
American Superconductor Case Overview of the Company American Superconductor offer electric power infra structure from its generation to distribution . AMSC is the leader in alternate energy . The company has two main business units : AMSC power systems and AMSC Superconductors AMSC Superconductors American Superconductor has spent nearly 18 years as public limited company developing transmission wires of high quality in to generate and deliver power The Company has been posting continuous losses and mostly dwindling on cash . It has however posted recently its first ever profit for the quarter
ended 31st March 2009 by earning a profit of 1 .3 million or 3 cents per share (MSN Money
Debt Verses Equity Financing
Equity and debt financing both have their advantages and disadvantages explaining why most big companies select an optimal capital structure which is a mix of debt and equity
Theoretically having a higher ratio of debt in the capital structure maximizes the return on equity . The interest payments on debt are tax deductible and usually the cost of debt is much lower than the cost of equity
With debt financing a company pays a fixed interest payment irrespective of the amount of profit or growth it has achieved i .e . it does not have to share its profits with its creditors . For a profitable company requiring extra capital , debt financing ' is the best option because with debt financing it does not have to share its profits or the ownership of the business with others . Equity injection however results in...
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