DEBT OR EQUITY

Debt Financing or Equity Financing

Debt Financing or Equity Financing

Under what conditions would a company prefer to raise capital from debt or equity and why?

Debt financing and equity financing are the two major types of financing for a business. Debt financing is a type of financing facility, in which a company obtains loan from a bank or any other financial institution. (Davey 1982) While, equity financing is a type of financing, in which the company obtains the funds from the outside investors through issuing stock, common stock, or preferred stock. The main advantage of debt financing is the fact ...