Debt vs Equity There be two basic ways of financial support for a business: Debt financing and equity financing. Debt financing is defined as borrowing coin that is to be repaid over a period of time, usually with interest (Financing Basics, 1). The lender does not actualise any ownership in the business that is borrowing. Equity financing is described as an exchange of money for a region of business ownership (Financing Basics, 1). This form of financing allows the business to obtain funds without having to repay a specific amount of money at any particular time.
There are also a few different instruments that could be defined as either debt or equity. One such instrument is bank line options that an employee can exercise after so many days with the company. Either using the debt or equity method, or a combination of the two methods can be used to identify for stock options or other instruments with the similar characteristics. There are pros and cons to deciding to use...If you want to get a full essay, score it on our website:
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