Which one is best to company either debt or equity?
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Answer Posted / ankita dabas
Whether a company issues debt or equity is a function of
the type of business we are considering. If it is a young
or a stratup company then it may not have the requisite
cash flows to service the debt or may get debt at a very
high rate, therefore the company would choose to raise cash
through equity. Whereas a well established business with
stable cash flows will be able to service its debt
comfortably and would therefore raise debt. Also the asset
base of a company determines how easily a company can raise
debt or not.
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