Long-term finance

In this lesson

1. 0:00 Long term finance introduction
2. 1:05 Debt versus equity financing overview
3. 1:58 Why debt finance costs less
4. 3:43 Bank loans and bonds explained
5. 4:49 Leases as finance agreements
6. 6:22 Convertible debt hybrid instruments
7. 7:51 Equity finance types and costs
8. 9:55 Venture capital funding explained

About this lesson

risk profile, and cost of capital. You'll understand why debt is typically cheaper due to tax relief on interest, how gearing impacts financial risk, and the practical advantages and trade-offs of each financing method. This is essential for FM, AFM, and strategic modules where capital structure decisions directly influence exam case studies and real-world business strategy. The video explores debt financing in detail, showing how bank loans, leases, and bonds work as practical funding tools. Leases are highlighted as particularly useful for spreading asset costs without large capital outlays, while convertible debt is explained as a hybrid instrument split between debt and equity components. You'll see why organisations must account for convertibles in substance, separating the debt and equity elements for accurate financial reporting. Equity financing is then contrasted with debt, revealing why it's more expensive—dividends aren't tax deductible like interest is. The video distinguishes ordinary shareholders (who vote and receive variable dividends) from preference shareholders (who receive fixed dividends with priority but no voting rights). Venture capital is presented as specialist private equity funding for high-growth companies, where investors typically seek board representation and aggressive returns through exit strategies like IPO or share sales.

Duration: 12m