Key Question: Can you identify the effects of financing on the business$$s

balance sheet?

Do Now:

READ

DEBT FINANCING

Debt financing involves borrowing money and paying it back with interest,

with its most common form being a loan. A business can obtain debt financing

from a bank or an investor, which differs from equity financing, where an

investor receives a percentage of the business's ownership.

VS

EQUITY FINANCING

Equity financing is the process of raising capital through the sale of shares.

Companies raise money because they might have a short$-$term need to pay

bills or need funds for a long$-$term project that promotes growth. By selling

shares, a business effectively sells ownership of its company in return for

cash.

Can you conduct a comparative analysis between Debt versus Equity

Financing for your business?

DEBT FINANCING EQUITY FINACING

Pros: Pros:

Cons: Cons:

REVIEW

Pros & Cons of Equity Financing

$$ Pro: You Don't Have to Pay Back the Money. $...$

$$ Con: You're Giving up Part of Your Company. $...$

$$ Pro: You're Not Adding Any Financial Burden to the Business. $...$

$$ Con: You Going to Lose Some of Your Profits. $...$

$$ Pro: You Might Be Able to Expand Your Network. $...$

$$ Con: Your Tax Shields Are Down.