Why do small firms use debt financing despite the risks involved?
What will be an ideal response?
With debt financing principal and interest payments are legally enforceable claims against a business. Therefore they entail substantial risk for the firm. Despite the risks involved however, small firms use debt financing for several reasons. First, the cost of interest paid on debt capital is usually lower than the cost of outside equity, and interest payments are tax-deductible expenses. Second, an entrepreneur may be able to raise more total capital with debt funding than from equity sources alone. Finally, because debt payments are fixed costs, any remaining profits belong solely to the owners. This last strategy, employing a fixed charge to increase the residual return to common stockholders, is referred to as employing "financial leverage."
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Which of these is NOT a "brick-and-mortar" company that sells its goods and/or services online as well?
A. Wal-Mart B. Merrill Lynch C. Dell Computers D. eBay
Which of the following is a benefit of understanding the job characteristics theory?
A. Jobs can be designed so that people are more motivated. B. Jobs can be designed so that people are more frustrated. C. Jobs can be designed so that people work more steadily. D. Jobs can be designed so that people are more creative.
The TRUNC function can be used to add insignificant zeros to the right of a decimal point for numeric data
a. True b. False Indicate whether the statement is true or false
What items make up Pension Expense under a defined benefit pension plan?
What will be an ideal response?