Companies are financed in two ways, either with equity or debt financing.’ Considering the above statement, discuss the following sources of long-term financing of a business:
Unit- Long term financing
Companies are financed in two ways, either with equity or debt financing.’
Considering the above statement, discuss the following sources of long-term financing of a business:
4.1 Ordinary shares
4.2 Preference shares
4.3 Debentures
4.4 Convertibles
Debt financing is the act of raising funds by selling bonds, taking out loans, or other forms of borrowing.
Equity financing is the act of raising funds by selling shares in a company.
This is a very important distinction in accounting. Equity financing refers to raising money through the sale of shares in the company. Debt financing, on the other hand, involves raising money through the sale of debt.
Debt financing can be in the form of loans or bonds. Loans are typically given by banks and other financial institutions. Bonds are typically given by the government or other large organisations .
Step by step
Solved in 2 steps
