question archive The advantages and disadvantages have been discussed in depth

The advantages and disadvantages have been discussed in depth

Subject:BusinessPrice:2.87 Bought7

The advantages and disadvantages have been discussed in depth. Explain your views on this post.

Companies have many options far as financing is concerned and with these options comes advantages and disadvantages. A company that chooses to issue bonds can expect the following pros and cons:

-Pros: Borrows funds from bondholders to achieve the amount needed. Southwest Airlines can issue out bonds to get the airplanes they need (Braun & Tiez, 2018). Southwest can issue out bonds to several bondholders and can receive little amounts of money from each bondholder.

-Cons: For the bondholders, if they were overextending their funds to a particular company they can end up losing all their money. Shareholders can also fail by investing in a company with a low turnover ratio for it will take them longer to pay back the bonds. "Companies with shorter payment periods are generally better credit risks than those with longer payment periods".

Issuing bonds are just one of the option a company has when it comes to the concept of financing. Another option is borrowing from the bank. When borrowing from the bank, consider the following benefits and limitations:

-Pros: An alternative to borrow money without commitment or involvement needed after loans are paid off (DeMarceau, 2018). Per DeMarceau (2018), Banks "do not take any ownership position in businesses" (2018).

-Cons: Viewed as last resort due to restrictive debt covenants (Renaud, 2018). Examples by Renaud (2018) of restrictive debt covenants are "They can't issue any more debt until the bank loan is completely paid off. They can't participate in any share offerings until the bank loan is paid off. They can't acquire any companies until the bank loan is paid off" (2018). Bond markets perform to be also merciful than banks and frequently perceived as being comfortable to do business with (2018).

The last type of financing that needs review in this post is Equity financing. Per Kunigis (2017), there pros and cons to equity financing and there are the following:

- Advantages: Considered to be the less stressful option. No need to worry about credit. Learn by experience and partnerships. No monthly payments needed.

-Disadvantages: You must share your profits. Loss control of the business. Conflicts between having to adapt to other's vision and mission for your business.

Option 1

Low Cost Option
Download this past answer in few clicks

2.87 USD


Option 2

Custom new solution created by our subject matter experts


rated 5 stars

Purchased 7 times

Completion Status 100%