Financial instrument
Under financial instruments are understood in business administration all the financing operations that it can be inserted measures.
General
The term financing instrument is often used in specialist literature, but is usually not defined. It is a compound that is made up of the terms financing and instrument, so that the use of tools as a "means to an end" is necessary for financing issues. Financing instruments are means for the purpose of corporate financing , which include all measures of capital raising and repayment. In a company , the times at which capital is paid in ( sales ) and capital paid out ( investments ) are different. Hence, funding is required as one of the operational functions . A large number of financing instruments have been developed to meet the financing requirements.
Refinancing
These can basically be divided into refinancing and refinancing instruments. In Neufinanzierungsinstrumenten is in the position of the balance in passive , active and balance neutral distinguished. Another differentiating criterion is the period for which the financing is carried out.
Passive financing instruments
Passive financing instruments change the liabilities side of the balance sheet and regularly lead to a balance sheet extension . This category includes the most important financial instruments. Passive financing instruments are differentiated on the one hand according to the origin of capital and on the other hand according to the owner position.
| Financing / source of funds | |||
| External financing | Internal financing | ||
| capital | Equity | z. B. Capital contribution | z. B. Profits , Depreciation |
| Borrowed capital | z. B. Loans , bonds | z. B. Provisions | |
Active financing instruments
Active funding elements change the asset side of the balance sheet through reallocation. Examples of active funding are:
Not all instruments can be clearly divided into this scheme. The term hybrid financing instruments has become established for these .
Balance sheet-neutral financing instruments
Financial elements that do not affect the balance sheet have no impact on the balance sheet when applied. The most important off-balance sheet financing element is leasing .
Modernity of the financial instruments
A distinction is made between conventional and hybrid financing instruments . The latter are often mixed forms of equity and debt, such as convertible and warrant bonds , which are endowed with the equity kicker and mezzanine capital . But shareholder loans , preferred shares , typical and atypical silent participation , profit participation certificates or promissory note loans are also among the hybrid financing instruments. The further development of existing financing instruments and the development of completely new financing instruments are summarized under the term financial innovation .
Refinancing
In contrast to refinancing, refinancing serves to change an existing financing concept. Important refinancing measures are:
- Prolongation : an existing financing is extended;
- Debt rescheduling : in the case of existing financing, interest and / or repayment payments are contractually postponed;
- Consolidation : short-term debt is converted into long-term;
- Substitution: an existing financing is replaced by another;
- Deferral : the due date of debts or individual repayment dates is postponed.
Maturity
Financing elements are divided into:
- short-term financing elements that meet the capital requirement up to max. Cover 1 year
- Medium-term financing elements that cover capital requirements for up to 5 years
- long-term financing elements that cover the capital requirement over 5 years
Decision on the use of financial instruments
When it comes to the rational selection of financing instruments, the following aspects are important from a company perspective:
- expected return on investment ,
- Financial needs
- Exit scenarios
- Preservation of independence
- Liability in the event of bankruptcy
- Balance sheet quality of equity
- transparency
- Corporate taxation
- entrepreneurial flexibility
- Financing volume.
These aspects are sub-goals that must be taken into account when selecting a financing instrument from the multitude of optional instruments.