it better to finance a company thru debt or thru equity? Why? What are the downside and upside to each?

Q: If a firm’s ROE is low and management wants to improve it, explain how using more debtmight help.

A: ROE refers to return on equity.It is a measure of profitability of a firm with respect to its…

Q: How can I tell if a company is financed by debt or equity?

A: here you need to know what is debt and equity debt means you're borrowing money from an outside…

Q: What is meant by the term ‘financial distress’. If we assume that financial distress exists, explain…

A: Financial obligations are liabilities of an entity towards outsiders such as suppliers, vendors,…

Q: What were the direct and indirect costs of the LIBOR scandal for Barclays? Are these costs only a…

A: The LIBOR Scandal: The LIBOR Scandal came to light in 2012 when Barclays and other banks admitted…

Q: 1. How are the capital market line and security market line similar?  How are they different?

A: Note : As per the bartelby guidelines only first question will be answered.    Similarities in…

Q: How does added debt potentially decrease the value of a firm?

A: Debt can be positive as well as negative, firms prefer to use debt in their capital structure to…

Q: In finance, as in accounting, the two sides of the balance sheet must be equal.  we valued the asset…

A: High leverage in a company refers that the proportion of debt is significantly higher than a normal…

Q: What is your understanding on private equity, is it financial institution? Explain. If you are a…

A: Private equity is a type of alternative investment that involves money that isn't traded on a public…

Q: Why are the costs of selling equity so much larger than the costs of selling debt?

A: The Debt and Equity are part of capital structure of a company. Cost of equity is the minimum…

Q: Please answer the following question according to the figure below. 1. How does increase in debt…

A: Debt and equity financing Each source of financing has its own advantages and disadvantages. For…

Q: how do banks improve their net profit margin to increase Return on Equity?

A: Return on Equity (ROE) measures the company’s net income to the value of its total shareholders’…

Q: What rate do investors use to discount the capital gains and cash flows of firms?

A: Discounted cash flow estimates the present value of an asset by using projected cash flows.…

Q: In terms of financing costs and profits, when should a financial manager of a firm: (a) issue new…

A: Honor Code:-- "Hi there, thanks for posting the questions. But as per our Q&A guidelines, we…

Q: How banks can improve their return on equity and what are its negative externalities.

A: RoE is ubiquitous in banks, serving as both an indicator of overall performance and a means of…

Q: What must a company do in the long run to be able to provide a return to investors and creditors?

A: Investments: Companies invest in stocks and bonds of other companies or governmental entity to…

Q: What is NOT a question that needs to be answered when completing financial due diligence? A. Is…

A: Financial due diligence is an integral part of the merger and acquisition process. It states that…

Q: Financial markets: efficient and other.  How are financial firms able to make profits? Under what…

A: Introduction: Usually, financial institutions such as banks and insurance providers raise and pool…

Q: you think that the pandemic has impacted the ability of firms to raise

A: Pandemic have impact on whole business scenario and financial conditions.

Q: When looking to invest corporate dollars, is the top-down approach is preferred over the bottom-up…

A: Answer: Corporations are exposed to factors which are related to macroeconomic. Therefore, while…

Q: explain further the principle of self-liquidating debt and how can it be used to manage a firm's…

A: Debt is referred as an obligation, which requires one party that is debtor for making the payment or…

Q: Does it matter if the firm raises capital through debt or equity? Why or Why not?

A: Debt involves borrowing money that is to be repaid including the interest. Whereas equity involves…

Q: Your WACC formula is a simplified version for a company using only debt and equity. In a real…

A: WACC is weighted average cost of capital. It is the cost of capital of the company as per the…

Q: Which of the following makes this a true statement? In this slightly more realistic world with…

A: We derive a firm's value by discounting its future cash flows. We use weighted average cost of…

Q: What are the trade-offs in financing a company by owner versus non owner financing? If non owner…

A: Financing is the method through which a corporation funds its operations and business activities by…

Q: There are advantages and disadvantages of debt financing in contrast to equity financing. Which of…

A: Debt financing has less risk as compared to equity financing, which is why the cost of debt is less…

Q: (1) What factors might lead a company to gainadditional funds through debt financing rather…

A: Financial Activities: Financial exercises are exercises that organizations embrace to assist with…

Q: In rising interest rate environment, what will be the impact on highly leveraged companies? Evaluate…

A: When a business, asset, or investment is described as "highly leveraged," it suggests that there is…

Q: Which is more favorable for a business - huge debts or small debts? Justify your position

A: Stockholders’ equity is the measure of assets staying in a business after the sum total of the…

Q: What are the differences between raising capital from a financial institution and raising finances…

A: Financial institution and Financial markets: Financial institutions can be defined as any company…

Q: What can I recommend to this company to increase its liquidity position?

A: Current ratio: It is one of the liquidity ratios which is calculated by dividing the current assets…

Q: articipate in the ownership of the firm. (b) Investors in debt are paid interest. (c) Debt is more…

A: Debt capital consists of the securities that represent lenders or financial creditors to the firm.…

Q: Is debt good for a company? Why or Why not?

A: In terms of finance, debt can be defined as the borrowed money on which the borrower of the fund is…

Q: What are some factors that affect capital structure decisions made by management? What are the…

A: Capital structure is the mix of debt and equity carrying by the company. The debt and equity are…

Q: What is market efficiency? Define. In addition, what are the important implications for financial…

A: Market efficiency is a concept that shows information is transferred from one to one in a perfect…

Q: Why do companies use so many different types ofinstruments to raise capital? Why not just use…

A: Finance is the life-blood of every organization. Every organization needs finance for its day-to-day…