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There are some industries that have used a method of financing called debt capital. One industry...

There are some industries that have used a method of financing called debt capital. One industry that does this frequently are healthcare facilities because they can actually project guaranteed cash flow based on contracted services with insurance companies. In this discussion provide your insight to this method of generating capital and if it is ethical and sound? Why do you have the position you have on debt capital? Please articulate within 300 words or less.

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There two ways of raising finance,debt or equity.The cost of debt of raising finance is lower than cost of equity.Funding by means of debt capital happens when a company borrows money and agrees to pay it back to the lender at a later date.This means of raising finance is more quick in terms of availability of funds.During these days,financing through debt is common.Smaller businesses may even use credit card to raise their own capital.There is no unethical practice if someone use debt to finance its capital needs.If someone is sure of cash inflows to repay the debt on time then debt provide liquidity to the business.In case of healthcare facilities they are sure of cash inflow due to contracted services with insurance companies.Thus,they are not afraid of bankruptcy.Accordingly,debt capital is most effective means of raising capital for healthcare facilities industry.

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