for each statement about requirements for equity vs debt financing, select true or false. note: you will…

for each statement about requirements for equity vs debt financing, select true or false. note: you will receive partial credit for each correct selection. the main advantage of equity financing is that there is no obligation to repay the money acquired through it. debt financing requires borrowing money whereas equity financing requires selling a portion of the company. creditors look favorably upon a relatively low debt - to - equity ratio, which benefits the company if it needs to access additional debt financing in the future. equity financing places a large financial burden on the company.

for each statement about requirements for equity vs debt financing, select true or false. note: you will receive partial credit for each correct selection. the main advantage of equity financing is that there is no obligation to repay the money acquired through it. debt financing requires borrowing money whereas equity financing requires selling a portion of the company. creditors look favorably upon a relatively low debt - to - equity ratio, which benefits the company if it needs to access additional debt financing in the future. equity financing places a large financial burden on the company.

Answer

Brief Explanations:

  1. In equity financing, shareholders are owners and there's no repayment obligation like debt, so the first statement is True.
  2. Debt financing involves borrowing, and equity financing involves selling company - ownership stakes, so the second statement is True.
  3. A low debt - to - equity ratio is favorable to creditors as it indicates lower risk, beneficial for future debt financing, so the third statement is True.
  4. Equity financing doesn't place a large financial burden in the sense of repayment obligations like debt does, so the fourth statement is False.

Answer:

  1. True
  2. True
  3. True
  4. False