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Having the appropriate debt-equity mix is very important to the financial success of any business. One must give careful consideration to the mix of debt and equity capital which your organization is to have. Although debt finance is cheaper, obtaining such finance depends on your ability to repay. It may also require significant security. One must also ensure that your organization is not too leveraged (i.e., the ratio of debt to equity is not too high).
I recently completed a simulation exercise for FIN/325 titled Determining the Debt-Equity Mix. During the simulation I was given the role of owner of a coffee shop and was taken through the various stages of the evolving business. Having the appropriate debt-equity mix is very important to the financial success of any business. One must give careful consideration to the mix of debt and equity capital which your organization is to have. Although debt finance is cheaper, obtaining such finance depends on your ability to repay. It may also require significant security. One must also ensure that your organization is not too leveraged (i.e., the ratio of debt to equity is not too high).
I recently completed a simulation exercise for FIN/325 titled Determining the Debt-Equity Mix. During the simulation I was given the role of owner of a coffee shop and was taken through the various stages of the evolving business
Having the appropriate debt-equity mix is very important to the financial success of any business. One must give careful consideration to the mix of debt and equity capital which your organization is to have. Although debt finance is cheaper, obtaining such finance depends on your ability to repay. It may also require significant se ...