Previous Topic

Next Topic

Logic - Debt

When it comes to raising finance, debt is one alternative and equity the other. Whether a company requires finance in the first place is determined by whether or not it has profitable projects in which to invest (i.e. projects that return more than the investor could get otherwise). If that is the case they will wish to raise cash and the amount of debt vs equity will be determined by their costs which are in turn determined by the risk. Risk will in part be determined by the D/E ratio.

See Also

Logic - Finance

Logic - Takeover

Logic - Dividends

Logic - Equity

Logic - Finance - Investor Public Relations