📚 Seth MB


Search IconIcon to open search

Capital Structure

Last updated Jul 4, 2023 Edit

Equity = amounts invested by the owners of the business (SHARE CAPITAL) (RETAINED PROFITS) LOWER RISK, LOWER REWARD

Debt = Finance provided to the business by external parties (BANK LOANS) (OTHER LONG-TERM DEBT) HIGHER RISK, HIGHER REWARDS (MAKING PROFIT ON OTHERS’ MONEY)

# Reasons for higher equity in capital structure:

# Reasons why high levels of debt can be an objective