Different ways companies use to finance themselves:
Companies are initially formed with a certain amount of money, in a future, a well run company may not have enough cash in reserve to overcome a new investment and may need to obtain capital some other way, these vary. The company could be listed on major stock exchanges issuing stocks. This could disappoint old shareholders who will notice their stock prices will decrease; this is easily compensated by giving them first buying choice. Stocks will give their owners the right to have an opinion, and if someone buys more than 50% they could do as they wished with the company.
Another way to finance would be issuing bonds, these are titles that represent a loan to the company, at the date on the bond, and the company will repay the total amount and the interest rate. Bonds in contrast to shares do not give company ownership; simply represent a right to be paid in an agreed future.
A company may also finance itself by asking a bank for a loan, or a credit line. The differences are that loans are a certain amount of money given to the company which will pay it back monthly or as agreed. A credit line is a right to withdraw money from the bank as needs show up, the company uses all the money it needs, and it doesn’t mean it will use all it is allowed to though, and will only pay for the amount spent.
To sum up I wish to note that the company in need of financing will study its case and then consider which way it will use.

Mark = 5

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License