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Debt Equity Ratio: How much Debt is to be Borrowed

How Much Debt should be Borrowed If a person wants to buy a car that costs $10000. He decides to make and down payment of 60% or $6000 and asks a bank to finance the remaining 40%. The bank is quite willing to enter into the deal, since it holds a car valued at $10000 as collateral for its $4000. This is a basic example of how a company would think in terms of raising finance through equity and debt. If [...]

Finance Capital Structure

Finance Capital Structure To support its investments, a firm or a company must find the means to finance them. Equity and debt represent the two broad sources of finance for a business firm. Equity consists of equity capital, retained earnings and preference capital. Debt consists of term loans, debentures and short-term borrowings. Some of the types of long-term finance options that are available are: Equity Capital: Equity Capital is one of the basic types of finance. Equity capital is issued in the [...]