Scenario 9-1. Jim is interested in beginning his own small business dealing with the repair and maintenance of household appliances. He has a talent for fixing these types of appliances and has been doing so as a sideline business for several years. He has acquired some of the needed tools; however, a sizeable investment will need to be made in tools and equipment in order for him to repair the appliances that will be brought to his shop for service. He would like part of his competitive advantage to be the capability to fix all appliances, not just one type. Jim has just one small problem--a lack of funds. He comes to you for advice.
-In Scenario 9-1, the primary disadvantages of using equity financing are all but which of the following?

Question

Quizplus · Accepted Answer

Equity financing does not constrain cash flow because it does not require regular repayments like debt financing does. Instead, investors receive a share of the ownership and profits.