Similarities & Differences Between Debt And Equity With Relationship
Debt Vs Equity Financing Pros And Cons 1. A Debt is the Long-Term Liability of a business. It is payable over long period of time i.e., more than one year to outsiders of t he busi ness i.e., c reditors, ba nks, fi na ncial i nstitutio ns, etc . The best Example is Bank Loan. It is financed by the business to utilize different projects or to start a business when the group of people lack sufficient funds but have skills to establish a well renowned business. T his process of raisi ng mo ney for various projects of t he busi ness is called De bt Fi na nci ng while Equity is the right of the owners of the business (Shareholders or Stockholders) who invested in the business in order to get fair return (Dividend) of their investments in the form of Share Investments in a company or corporation a nd suc h way of raisi ng mo ney for ru n ni ng various projects of t he busi ness is called Equity Fi na nci ng. 2. A Debt is payabl...