Provide one benefit or detriment to using debt or equity as a source of Net New Financing? min 200 words
Provide one benefit or detriment to using debt or equity as a source of Net New Financing? min 200 words
Homework Answers
Advantages or disadvantages of using debt or equity are:
Debt = these are the creditors of the company. Advantage of debt is that company retains control over the company. Equityholders are the owners of the company hence control gets diverted. But it does not happen in case of debt. Another advantage can be that company enjoys tax benefits because. Deduction is allowed for the payment of interest on debt. Disadvantage of debt is that payment of interest is mendatary for debt irrespective of the fact that company has made a profit loss therefore it creates an fixed obligation on the company.
Equity = These are the owners of the company. Advantage of equity is that dividends are only paid when there is a profit made by the company. Hence there is not any fixed obligation on the company. And the capital is also paid only upon winding up of the company. Disadvantge of equity is that it diverts the control over the company since equityholders are owners and its considerd as more expensive than debt financing.
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Provide one benefit or detriment to using debt or equity as a source of Net New Financing? min 200 words
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Minimum of 200 words and please provide 2-3 links or articles as
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Trends in ratios that measure the relationship between debt and equity provide information about how many of the following? • Long term stability • Degree of risk in using debt financing • Margin of safety to creditors in the event of liquidation a. b. c. d. 0 1 2 3
Minimum of 200 words and please provide 2-3 links or articles as
references
2. Develop a new sustainable business (not discussed in Chapter 6) idea based on the sharing economy. Make sure you provide enough detail about your idea and why you consider it sustainable in terms of environment, social equity, and profits.
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