Equity provides more financial flexibility for a firm than debt.

Question

Quizplus · Accepted Answer

Equity represents ownership in a company, and therefore does not require repayment like debt. This provides more financial flexibility as the company can use the funds as needed without worrying about interest payments or principal repayments. Additionally, equity investors may be more willing to provide additional funding or flexibility during tough times, whereas debt holders may be less willing to do so.

Equity Provides More Financial Flexibility for a Firm Than Debt