Debt vs Equity Explanation | Learn With Finance Strategists | Your Online Finance Dictionary

Описание: All companies need money to pay for taxes, the purchase of assets, payroll, and much more.

If they don’t generate enough cash from their current operations, they may need to raise capital.

Companies have a choice of whether to raise capital by issuing debt or equity.

Debt for a company can take the form of a loan or bonds.

Taking on debt tends to be risky since debt incurs both interest payments and a necessary repayment of the principal.

Usually, companies will only take on debt (or more accurately, they will only be granted debt from a lender) if the lender is confident in their ability to pay it back.

This is determined by looking at the company’s credit quality, their income, and the value of assets that can be used as collateral.
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0:00 Difference between Debt and Equity
0:25 Forms of Debt
0:46 Equity Offering Definition
1:09 Debt Financing and Equity Financing
2:18 Debt vs Equity Questions
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