As Whole Foods considers equity financing, it thinks about the influence that it may have on company operations. Which of the following is an advantage of equity financing in relation to this key consideration?
A) higher interest rates increase the cost of financing
B) it can be either short or long term
C) it does not need to be repaid, which provides financial flexibility for the company
D) interest expenses can be deducted from company profits, lowering the company's tax liabilities

Question

Quizplus · Accepted Answer

Equity financing does not need to be repaid, which provides financial flexibility for the company. This means that there is no obligation to make regular payments, which can free up cash flow to be used for other operations or investments. Additionally, equity financing does not carry the same level of risk as debt financing, as the company is not under a contractual obligation to make payments.

As Whole Foods Considers Equity Financing, It Thinks About the Influence