Choosing the appropriate source of finance for our pertained business tends to be a difficult task this is because of the funding options available (Lipman, 2016). In our case, we are using two methods of financing they are; debt financing and equity financing. Therefore, to choose the best method that our case company should apply conducting a critical analysis tends to be a vital part. In conduction of critical analysis, we will have to consider certain factors using the financial information provided.
It is an important element that should be kept under consideration. Here, we look at the financial commitments that relate to a particular source of finance. This relates to what would happen if the firm borrows loans or consider using equity coming from shareholders (Lipman, 2016). Look at the firm’s financial leverage value debts stand at 1.54 and equity stands at 1.36. If the firms decides to borrow money for investment and the market seems to favor their investment the firm’s profits are likely to be higher than equity method of funding. Debt financing also allows the firm leverage small amounts of money into larger sums, meaning that the firm will be able grow rapidly. On the other hand funding, through debt as shown in the financial data time interest earned tends to be less that at equity funding.
Cost of finance plays a critical role in financing decision. The concept here is lowering cost and maximizing wealth (Phelps, 2015). From our financial data, additional borrowing through debts requires compensation for risk. Hence, this means there will be increased cost of equity. Issuing of new shares may serve as a strategic shift of focus for the firm because in debts financing there is a higher price per share compared to equity financing (Phelps, 2015). In addition, the business relationship ends once the debt is paid back which means there will be growth in the firm.
In general, the firm board plan on expansion should consider using the 15% interest rate debt because of the high financial leverage and the time interest earned is also less. Hence, this means that the firms will definitely succeed in their expansion plan.
Lipman, F. D. (2016). New methods of financing your business in the United States: A strategic analysis.
Phelps, C. W. (2015). Accounts receivable financing as a method of business finance. Baltimore: Educational Division, Commercial Credit Co.
Earn back money you have spent on downloaded sample
To export a reference to this article please select a referencing stye below.
Assignment Hippo (2022) . Retrive from https://assignmenthippo.com/sample-assignment/debt-financing-and-equity-financing-assessment-answer
"." Assignment Hippo ,2022, https://assignmenthippo.com/sample-assignment/debt-financing-and-equity-financing-assessment-answer
Assignment Hippo (2022) . Available from: https://assignmenthippo.com/sample-assignment/debt-financing-and-equity-financing-assessment-answer
Assignment Hippo . ''(Assignment Hippo,2022) https://assignmenthippo.com/sample-assignment/debt-financing-and-equity-financing-assessment-answer accessed 20/05/2022.
Talk to our expert to get the help with Debt Financing And Equity Financing Assessment Answers from Assignment Hippo Experts to complete your assessment on time and boost your grades now
The main aim/motive of the finance assignment help services is to get connect with a greater number of students, and effectively help, and support them in getting completing their assignments the students also get find this a wonderful opportunity where they could effectively learn more about their topics, as the experts also have the best team members with them in which all the members effectively support each other to get complete their diploma assignment help Australia. They complete the assessments of the students in an appropriate manner and deliver them back to the students before the due date of the assignment so that the students could timely submit this, and can score higher marks.Â The experts of the assignment help services at www.assignmenthippo.com are so much skilled, capable, talented, and experienced in their field and use our best and free Citation Generator and cite your writing assignments, so, for this, they can effectively write the best economics assignment help services.
Want to order fresh copy of the Sample Debt Financing And Equity Financing Assessment Answers? online or do you need the old solutions for Sample Debt Financing And Equity Financing Assessment Answer, contact our customer support or talk to us to get the answers of it.Assignment Help Australia
Want to order fresh copy of the Debt Financing And Equity Financing Assessment Answers? online or do you need the old solutions for Sample Debt Financing And Equity Financing Assessment Answer, contact our customer support or talk to us to get the answers of it.
Our motto is deliver assignment on Time. Our Expert writers deliver quality assignments to the students.
Get reliable and unique assignments by using our 100% plagiarism-free.
Get connected 24*7 with our Live Chat support executives to receive instant solutions for your assignment.
Get Help with all the subjects like: Programming, Accounting, Finance, Engineering, Law and Marketing.
Get premium service at a pocket-friendly rate at AssignmentHippo
I was struggling so hard to complete my marketing assignment on brand development when I decided to finally reach to the experts of this portal. They certainly deliver perfect consistency and the desired format. The content prepared by the experts of this platform was simply amazing. I definitely owe my grades to them.