ACCT302 W8 Forum

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School

American Public University *

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Course

302

Subject

Finance

Date

Apr 3, 2024

Type

docx

Pages

2

Uploaded by PresidentMorningKudu20

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In this discussion, please reflect on the previous weeks’ topics. Choose a topic you found to be difficult or hard to understand. Research this topic and present your findings. Include a summary of the topic, why you found the topic to be difficult, and what you learned after conducting the research. You MUST use the APUS Library to conduct your research. Hello Everyone, Congrats, we have made it to the final week of the course! I have chosen to discuss the difference between equity investments and debt investments for this final forum. A company must raise capital for its needs, and they have two primary options: equity investments or debt investments. Equity financing is when you sell a portion of the company for capital, while debt financing is borrowing the capital and keeping the portion of the company. An advantage of equity investments is that a firm is not required to pay back the borrowed capital, the sale of the portion of the company acts as the repayment. The disadvantage is that the company will now have to share profits with the new partner, which can become exceptionally large in comparison to the original capital amount. The advantage of debt investments is that no ownership is relinquished, and the interest to pay back the loan is tax-deductible. The downside of debt financing is having debt, which you must pay back. Although most companies use a combination of both options, I found an alternative view of companies considering the decision of using equity financing or debt financing. The referenced article takes the country's' economic or financial status into consideration when considering both options. This shows a case in Islam and concludes that using equity investments is best to help the financial state of Islam. It was a pleasure working with everyone and best of luck! Abdullateef Abdulqadir Maikabara, Sri Maulida, & Abdulmajeed M Aderemi. (2021). Debt-Based Versus Equity-Based Financing: A Comparative Analysis on Efficiency of Islamic Financial System. Ihtifaz (Online), 4(1), 1–. https://doi.org/10.12928/ijiefb.v4i1.3171
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