CFO Series: Lease or Buy, Debt or Equity - the Decision?

Overview

Is there a perfect mix of financing that we should aspire to achieve? What does financial theory tell us we should do? What is the cost of our financing decisions? Should we lease an asset, or buy it outright? How do we analyze this decision? How can we survive financial distress? These are all topics that every enterprise faces. In this seminar we will look at theory and practice to help resolve the dilemmas. If you are involved with financing the organization, this seminar is essential.

Prerequisites

Clear understanding of discounted cash flow analysis and net present value.

Objectives

After attending this presentation, you will be able to...

• Identify the optimum mix of debt and equity.
• Properly evaluate the decision to lease an asset versus buy.
• Comprehend the complexity of balancing debt versus equity.

Highlights

The major topics that will be covered in this course include:

• What is the cost of capital (COC)?
• How does the mix of debt versus equity affect the cost of capital?
• What is the right balance of debt to equity, and why does it vary?
• Modigliani and Miller’s Nobel prize-winning theory.
• How do risks affect my choices?
• Risk aversion choices amongst providers of finance.
• How will capital structure affect me in times of financial distress?
• Buying assets versus leasing them – what needs to be considered?
• Evaluating a lease versus buy decision and why so many get the analysis wrong.