suresh Can you explain the difference between equity and debt financing?
Equity financing involves raising capital by selling shares of the company to investors. In return, shareholders receive ownership in the company and are entitled to a share of profits. Debt financing, on the other hand, involves borrowing money from lenders that must be repaid with interest over a specified period of time. Unlike equity financing, debt financing does not dilute ownership in the company but comes with the obligation to make regular payments and eventually repay the principal amount borrowed.
As a Finance Analyst, it is crucial to understand the implications of choosing between equity and debt financing options, as each has its own advantages and disadvantages in terms of financial management, risk, and control.
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