What are the advantages and disadvantages to issuing debt vs equity?
Lets look at what Debt Financing and Equity financing are before going for their advantages and disadvantages.
Debt financing is borrowing of money for the business. It can be for short term financing or for long term goals. The debts are to be paid in accordance to the stated policies with interest amount over the sum borrowed. The individuals, who finance these debts, do not have any ownership interest in the business. The business which employees these debts have limited obligation for the repayable amount.
Equity financing means sharing of ownership of the business depending upon the invested amount. So, if an individual shares the equity capital of any business, he has to invest the amount, which wont be considered as debt or loan. The equity financing of public companies are freely transferable.
Advantages and Disadvantages of Debt Financing
Advantages of Debt ...
Solution clearly explains the Advantages and disadvantages of issuing debt vs equity