Advantages of using debt finance, Finance Basics

Advantages of Using Debt Finance

  • Interest on debt is a tax permit able expense and as that it is reduced via the tax allowance.
  • The cost of debt is fixed regardless of profits created and as such within conditions of debt will be lower of high profits the cost.
  • It does not call for a lot of formalities to rise and as such it ideal for critical ventures
  • It is usually self-sustaining in such the asset acquired is required to pay for its cost that is leaving the company along with the value of the asset.
  • In case of long-term debt, amount of loan declines along with time and repayments reduce its burden to the borrower.
  • Debt finance does not influence the company's decision as lenders don't contribute at the AGM.

 

Posted Date: 1/29/2013 4:33:24 AM | Location : United States







Related Discussions:- Advantages of using debt finance, Assignment Help, Ask Question on Advantages of using debt finance, Get Answer, Expert's Help, Advantages of using debt finance Discussions

Write discussion on Advantages of using debt finance
Your posts are moderated
Related Questions
Comparison between Debt Finance and Ordinary Share Capital Differences between Debt Finance and Ordinary Share Capital as Equity Finance as   Ordina

Types of Partners 1. General Partners -Unlimited active and liability in participation in partnership activities. 2. Limited partners - Limited liability in the management of


There are four different commonly used financial hedging techniques and some operational hedging techniques that firms use to manage currency risk. Drawing on literature, critical

ROE - Return on Equity The average of the industry ROE was 21.38% for 2004, 24.99% for 2005, and 23.56% for 2006. The chart showed that after the acquisition of IBM PC di

Advantages of Using Debt Finance Interest on debt is a tax permit able expense and as that it is reduced via the tax allowance. The cost of debt is fixed regardless of

the real risk-free rate of interest is 4%. inflation is expected to be 2% this year and 4% during the next 2 years. assume that the maturity risk premium is zero. what is the yield

Advantages of Overdraft Finance 1. It is useful in financial crisis such an accountant cannot forecast because of abrupt fall in profits so liquidity problems. 2. In

Charleston Industrial revised its dividend policy and decided that it wants to maintain a retained earnings account of $1 million. The company''s retained earnings account at the e

Relationships and interactions among money, bond, stock and mortgage markets