Question

Someone to whom a company has a debt is known as an investor

Someone to whom a company has a debt is known as an investor

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Debt Financing - Debt financing is when a firm raises money for working capital or capital expenditures by selling debt instruments to individuals and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise that the principal and interest on the debt will be repaid.

The individuals or institutions who become creditors as per mentioned above are knows as the investors.

In case of any query/clarification please leave a comment below, if the answer was helpful please leave a thumbs up, Thanks!

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A company has total stockholders' equity of $2,000,000 and total debt of $3,000,000. The equity ratio...
A company has total stockholders' equity of $2,000,000 and total debt of $3,000,000. The equity ratio is: 40%. Can someone explain how to arrive at the 40%?
1. An equity investor is considering purchasing a company which has $575 of EBITDA for a...
1. An equity investor is considering purchasing a company which has $575 of EBITDA for a 6x multiple. The equity sponsor is going to put in $1,438 of equity. How much debt is needed? What multiple of EBITDA is this debt? Assuming a 10% interest rate, what would interest coverage be after the acquisition? 2. A company with EBITDA of $1,250 is purchased for a 7x multiple, financed with $6,250 of debt. How much equity is used for the purchase?...
An investor company owns 30% of the common stock of an investee company. The investor has...
An investor company owns 30% of the common stock of an investee company. The investor has significant influence over the investee, and acquired its equity interest in the investee on January 1, 2018 for $525,000. On the date of acquisition, the investee’s stockholders equity was $1,500,000, and the fair values of the investee’s individual net assets were equal to their reported book values. During the year ended December 31, 2018, the investee reported net income of $50,000 and dividends of...
A potential investor has been identified, but before it is willing to commit, it has requested...
A potential investor has been identified, but before it is willing to commit, it has requested information about SunsTruck's current debt from the junior accountants. Identify the correct financial statement for your junior accountants that will provide the investor with the information it has requested. Explain to your junior accounts why you are giving them this financial statement and where the debt information is located.
One of the advantages of mezzanine debt, from the investor perspective, is that there are borrower...
One of the advantages of mezzanine debt, from the investor perspective, is that there are borrower restrictions. Typically, mezzanine lenders would have the right to approve all of the following except: Select one: a. management-by-law changes b. dividend payments c. additional debt issuance d. acquisitions
Moody’s Investor Service has issued Company X with a credit rating of Aaa and Company Y...
Moody’s Investor Service has issued Company X with a credit rating of Aaa and Company Y with a credit rating of Ba. i. Based on this information, from which company would you buy a bond? Explain your answer
One investor has issued a target price of $65 for A company. the normal P/E ratio...
One investor has issued a target price of $65 for A company. the normal P/E ratio in the railroad industry is 20. What is the amount of the dividend the investor need to pay one year from now?
Novak Ltd has acquired 45% of ordinary shares in Spetz Ltd. Another investor has a 10%...
Novak Ltd has acquired 45% of ordinary shares in Spetz Ltd. Another investor has a 10% shareholding in Spetz Ltd whilst the remaining voting rights are held by thousands of shareholders, none of whom individually hold more than 1% of the voting rights. Novak Ltd holds convertible debt instrument that, as at 31 August 2019, are convertible into ordinary shares of Spetz Ltd at a price of $ 9 per share. At 31 August 2019, the shares of Spetz Ltd...
A company has two executives, a president and a CEO, each of whom is rewarded with...
A company has two executives, a president and a CEO, each of whom is rewarded with an annual bonus. The bonus for each executive is calculated as a percentage of the net profit that remains after the bonuses of both executives have been deducted from the gross profit. The president receives 10% of the net profit and the CEO receives 6% of the net profit. If the gross profit is $900,000, what is the bonus amount, in dollars, for the...
Why might an investor prefer to invest in a company's equity rather than its debt?
Why might an investor prefer to invest in a company's equity rather than its debt?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT