Companies with a history of net operating losses are prone to issue which one of the following to raise money?

Question

Quizplus · Accepted Answer

Companies with a history of net operating losses may have difficulty issuing debt because they may not have a steady income or collateral to secure the loan, so it is unlikely they will issue debenture or serial bonds. Issuing notes payable may also be difficult as they may not have a good credit rating. As such, issuing preferred stocks may be the best option as preferred stocks do not require collateral and do not have a maturity date, making it easier for the company to manage their cash flow.

Companies with a History of Net Operating Losses Are Prone