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36
MONEY

Where Do You Plan to Get Money?
 

Chart on how businesses plan to finance growth.
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Earlier this year Ernst & Young surveyed business owners about how they plan to finance growth. Most respondents with revenues of up to $40 million said they'd rely heavily on cash flow and profits (much as they had said in last year's survey). But plans to use other types of financing changed. The number of companies preparing to take advantage of lower interest rates by increasing their use of short-term debt surged. Bigger businesses were thinking more about selling stock.

Percentage of business that chose each financing method, by company size

$1Ñ$14 million $15Ñ$40 million

in revenues in revenues

1992 1991 1992 1991
Cash flow/operating profits 71.4% 64.7% 64.4% 68.6%
Short-term bank debt 58.9 38.2 53.3 51.4
Long-term bank debt 35.7 41.2 51.1 42.9
Private placements 21.4 32.4 17.8 22.9
Private individuals 12.5 29.4 8.9 8.6
Public equity 7.1 5.9 24.4 14.3
Venture capital 5.4 5.9 6.7 8.6

Source: Ernst & Young survey of 259 members of the Institute of American Entrepreneurs, Dallas, May 1992.

Last updated: Nov 1, 1992




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