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13 November, 01:05

How MIGHT stock issues be preferable to borrowing money for firms looking to finance operations?

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  1. 13 November, 04:27
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    A few considerations might make stock issues more preferable than debt financing. One, is the credit of the operation. If a firm has less than stellar credit, than the terms for lending might not be favorable to the operation.

    Stock might be preferable as well if a company thinks that they can buy back the stock in a shorter time period than the terms of a loan.

    Finally, stocks might be preferable depending on the amount of money requested. Loans will have fixed terms while larger funds can be raised for stock.
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