Which factor should be taken into account when deciding between debt and equity finance?

Question

Quizplus · Accepted Answer

All of the factors mentioned should be taken into account when deciding between debt and equity finance.

A) The effect on earnings per share is an important factor as it can impact the company's profitability and attractiveness to investors. 
B) The security available is also important as debt finance typically requires collateral while equity finance usually does not. 
C) The purpose of the finance is crucial to consider as it can determine which type of finance is more appropriate. For example, if the purpose is to fund long-term projects, equity may be a better choice as it does not require repayment in the short-term, while if the purpose is to fund short-term operations, debt may be a better choice as it can be repaid quicker.

Therefore, all of the above factors should be considered when deciding between debt and equity finance.

Which Factor Should Be Taken into Account When Deciding Between