BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Debt Capital
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Equity Share Capital
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Both of the above
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None of these
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Detailed explanation-1: -(4) Return on Investment-ROI: The greater return on investment of a company increases its capacity to utilize more debt capital.
Detailed explanation-2: -The different types of funds that are raised by a firm include preference shares, equity shares, retained earnings, long-term loans etc.
Detailed explanation-3: -Equity financing may be less risky than debt financing because you don’t have a loan to repay or collateral at stake. Debt also requires regular repayments, which can hurt your company’s cash flow and its ability to grow.
Detailed explanation-4: -Debt capital refers to borrowed funds that must be repaid at a later date. This is any form of growth capital a company raises by taking out loans. These loans may be long-term or short-term such as overdraft protection. Debt capital does not dilute the company owner’s interest in the firm.