When a company should raise money by selling bonds instead of clean shares?
Answers: In addition to what Rabbit said, a bond is a loan and get paid interest and is salaried off past stockholders if the company goes broke. If they issue more stock, the value of respectively share goes down and the shareholders win upset. On the other hand, the more debt affects the financial status of the company. In either valise, the company must deliver by increasing revenue and income to prove the action be worth it.
When a company issues bonds, the ownership of the company does not change. When it issues stocks, later that dilutes the equity in the company. It is two different operation and purposes. Generally the higher the export tax rate of a company the more debt becomes attractive. Because the interest is toll deductible. The optimum debt to equity combination would be the amount that minimizes the cost of capital for the company.
Never.
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Answers: In addition to what Rabbit said, a bond is a loan and get paid interest and is salaried off past stockholders if the company goes broke. If they issue more stock, the value of respectively share goes down and the shareholders win upset. On the other hand, the more debt affects the financial status of the company. In either valise, the company must deliver by increasing revenue and income to prove the action be worth it.
When a company issues bonds, the ownership of the company does not change. When it issues stocks, later that dilutes the equity in the company. It is two different operation and purposes. Generally the higher the export tax rate of a company the more debt becomes attractive. Because the interest is toll deductible. The optimum debt to equity combination would be the amount that minimizes the cost of capital for the company.
Never.
Resolved Questions: