Debt Financing

Syllabus

Syllabus: Thematic definition of lectures: 1. Content of Debt Financing. Definition of debt within the company’s capital structure; debt as an important tool for financing the company’s needs; the significance and evaluation of debt from the perspectives of investors, company management, creditors, and financial analysts. Current trends in debt financing. 2. Corporate Credit Strategy and Loan Decision-Making. Managing the provision of loans to other business entities; characteristics of commercial, supplier, and customer loans. Limiting factors in providing non-cash loans. The impact of loan provision on the company’s own financial situation. 3. Debt Strategy and Decision-Making in Corporate Debt Financing. Management decisions on securing financial resources for financing the company’s operational and investment needs. Positive effects and negative impacts of financing decisions through debt. Influence on the company’s financial and capital structure. 4. Analysis of the Company’s Debt Situation. Ability to repay debt; company indebtedness limits and their connection to cash flow; quantification of debt costs; internal and external factors influencing the level of debt costs. 5. Financing Options through Bank Loan Products. Forms of short-term bank loans to finance temporary operational needs; characteristics and principles of financing through overdraft, revolving, and lombard loans; principles and use of promissory notes for financing; forms of long-term bank loans for financing investment needs; mortgage loans. 6. History and Present of Banks and the Banking Sector in the Slovak Republic and the European Union. Origins of banks and their historical development from the 19th century to the present in Slovakia. Negative consequences of bank management in the 1990s in Slovakia before and after the split of Czechoslovakia. Brief description of the oldest world banks. Characteristics of commercial banks in Slovakia today. 7. Bank Regulation within the Eurozone. Principles, objectives, and role of the European Central Bank (ECB) and its influence on the Eurozone; structure and decision-making bodies. Management of monetary policy within the Eurozone. Characteristics of the European system for resolving financial difficulties of commercial banks in the Eurozone; the single deposit protection scheme in commercial banks. 8. Banks and Banking in the Slovak Republic. Principles of banking sector regulation and prudential rules for banking business in Slovakia today. BASEL III. The role of the central bank in managing monetary policy. Assessment of bank stability from the perspective of clients and financial results achieved. 9. Loan Collateral Instruments. Collateral, preventive, and compensatory functions of loan collateral instruments. Forms of collateral instruments as secondary obligations. Characteristics of bank guarantees, suretyships, promissory notes, debt acknowledgment, contractual penalties, pledge rights, types and forms of collateral such as real estate, business shares, and others; registration of pledge rights; notarial central register of pledge rights; retention rights and possibilities of their use. Register of loans and guarantees. 10. Alternative Forms of Debt Financing. Characteristics of commonly used financing forms such as leasing, factoring, and forfaiting. Objects financed through operational and financial leasing and their advantages and disadvantages for meeting company needs. Characteristics and use of factoring in business activities and securing company financing needs. Principle and characteristics of forfaiting. 11. Corporate Management under Indebtedness Conditions. Causes of debt existence; reasons for insolvency; warning signs of future problems in an indebted company; characteristics of objective and subjective financial difficulties and possibilities for their elimination. Debtor’s obligations and recovery measures to improve an adverse financial situation. Possibilities of restructuring company financial processes. 12. Legal Aspects of Loans and Lending. Basic legal regulations of loans and credit processes. Content of loan agreements; rights and obligations of debtors and creditors. Sanctions and risks related to non-compliance with loan agreements. Provisions of basic legal norms related to loans and interest such as the Banking Act, Civil Code, and Commercial Code. 13. Psychological and Social Aspects of Debt Financing and Loans. Why do we incur debt? Why do we fail to repay loans and credits? Types of honest and speculative debtors and their psychological and social characteristics and attitudes. Thematic definition of exercises: 1. Information about course completion requirements, distribution of seminar paper topics, solving and practicing examples of interest calculation methods and debt interest. 2. Student presentations and discussion on the topic: Status and development of loans and interest rates domestically and abroad; comparison of trends in Slovakia with selected countries; development of loans in non-financial enterprises by sectors in Slovakia. Solving and practicing examples on quantifying financing needs. 3. Student presentations and discussion on the topic: Bank rules for providing loans to non-financial enterprises in Slovakia. Solving and practicing examples on debt costs and average cost of capital for a company. 4. Student presentations and discussion on the topic: Use of short-term financing in practice by Slovak companies. Solving and practicing examples on decision-making regarding financing of long-term investments. 5. Student presentations and discussion on the topic: Status and development of receivables and payables of non-financial enterprises in Slovakia. Solving and practicing examples on non-cash loans. 6. Student presentations and discussion on the topic: Evaluation of a company’s creditworthiness and the content of a company’s loan application. Control test on the material covered so far. 7. Student presentations and discussion on the topic: Functions and tools of the central bank in managing monetary policy. Solving and practicing examples on loan and interest rate coverage and loan costs. 8. Student presentations and discussion on the topic: European Central Bank and tools for regulating banks in the Eurozone. Solving and practicing examples on loan repayment schedules – annuity loans. 9. Student presentations and discussion on the topic: Options for financing investments from the European Bank for Reconstruction and Development and other non-commercial financial entities (SZRB, EXIM, etc.). Solving and practicing examples on overdraft loans. 10. Student presentations and discussion on the topic: Status and development of leasing and factoring in Slovakia and abroad; obtaining financial resources in a selected company through leasing and factoring. Solving and practicing examples on leasing and factoring. 11. Student presentations and discussion on the analysis of debt financing of a selected company. 12. Student presentations and discussion on the topic: Use of debt financing in a selected company, quantification of positive effects and negative impacts. Credit test on the material covered. 13. Review of acquired knowledge and final evaluation.