Professional Documents
Culture Documents
Finance 9
Finance 9
Finance 9
of equity financing.
In debt financing, the company is obligated to make regular interest payments and
eventually repay the principal amount. Failure to make these payments can lead to
consequences, including default.
On the other hand, equity investors participate in the company's success through capital
appreciation and dividends, but there is no fixed schedule for cash payments. Payments to
equity investors are typically discretionary and depend on the company's profitability and
decisions made by the board of directors.
In summary, the statement aligns more closely with equity financing, where regular cash
payments to investors are not a fixed requirement.