Fundamentals of Corporate Finance
10th Edition
ISBN: 9781260703931
Author: BREALEY, Richard
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 2, Problem 1QP
Summary Introduction
To discuss: About the financing sources of small private firms and give three examples also.
Expert Solution & Answer
Explanation of Solution
The small private firms can raise funds through only financial markets for their capital investment. The different sources of finance for a small private firm can be classified in to equity or debt financing.
Equity financing is a process of selling company stock to investors for raising capital. In which a part of ownership is vested in the hands of shareholders. Debt financing means selling debt instrument to individuals or institutions for working capital or capital expenditure requirements.
Sources of finance for the small business are the following:
- Own capital
- Small business loans
- Trade credit
- Banks
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Chapter 2 Solutions
Fundamentals of Corporate Finance
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