Page 192 - Finance for Non-Financial Managers

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Financing the

Business:

Understanding the Debt vs.

Equity Options

hroughout this book we have referred to the investment in
T a business that provides the cash for the business to get
started and begin operations. We’ve also looked at a balance
sheet that showed debt owed by the business—money bor-
rowed for some corporate purpose. But we have yet to talk
about how the money was raised and how the debt or equity
got onto the books.

How a Business Gets Financed—In the Beginning
and Over Time

While there are many books on this subject alone, we need to
get an overview of this important area. As we come to the final
chapters in this book, we will look at both debt and equity
financing, what they are, how they work, and why an owner or
CEO might choose one or the other, or both, to meet the com-
pany’s financing needs.
A word about competition: lending is a very competitive

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