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Why do companies issue more stock (do equity financing), and tell why they might want to...

Why do companies issue more stock (do equity financing), and tell why they might want to sell bonds (debt financing) instead.

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Answer #1

ANSWER DOWN BELOW. FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE.

Why the company likes to issue more stock:

1. There is no obligation to pay any fixed rate of Dividend to the equity capital.

2. Equity capital of the company can be issued without building any charge over the assets of the business.

Why the Company may prefer debt financing(sell bond):

1. It is the least costly source of long-term capital.

2. It gives flexibility in the capital structure.

3. There tax saving on interest payment.

4. creditors don't interfere in business operations because they are not entitled to vote.

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