Advantages of debt financing over equity financing include that interest payment on debt are tax deductible
What is debt financing?
Borrowing funds from banks, financial institutions, or other lenders (such as directors or other group companies).
When a company raises funds for working capital or capital expenditures by selling debt instruments to individuals and/or institutional investors, this is referred to as debt financing. Individuals or institutions that lend money become creditors in exchange for a promise that the principal and interest on the loan will be repaid.
What is 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 have a long-term goal and require funds to invest in their growth. By selling shares, a company is effectively selling ownership in their company in return for cash.
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Answer:
Explanation:
Solution
Given that:
Flyer company provided the following information stated below:
Cash sales = $169,000
Thew Selling and administrative expenses = $129,000
Sales returns and allowances, =$49,000
Gross profit,=$509,000
Accounts receivable= $295,000
Sales discounts =$33,000
Allowance for doubtful accounts credit balance =$3,100
Now,
we find the balance in the allowance of the doubtful accounts
Thus,
Flyer company debt expense = 2.5%
The sales in credit is = $469,000
Thus,
We calculate both the bad debt expense for Flyer's company and it's credit sales of
which gives us this,
Flyers debt expense that is bad = 2.5% * $469,000
= $11.25
Answer:
Avoidable interest are $569,564.64
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<em>The answer and procedures of the exercise are attached in a microsoft excel document. </em>
Explanation:
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