Debt and equity are the external sources of finance for a business. When a business needs a lot of money for an expansion of projects or for reinvestment and improving their products, services, or deliverables, they go for equity and debt.
Equity is helpful for those who would like to go public and sell the shares of the company to individuals. To conduct an IPO, a company needs to bear various costs.
股权融資更合用于那些但愿經由過程上市，向股民刊行股票举行融資的公司。但初次公然募股（IPO: Initial Public Offering）也是要承當不少本钱的，好比礼聘投資銀行（海內成為券商）做牙婆事情；礼聘管帐师事件所收拾、阐發并提交財政报表；礼聘状师做尽职查询拜访，合規阐發；履历漫长的期待审批時候，還可能一次次受挫。
In the case of debt, the story is slightly different. Businesses opt for debt for two main reasons. Firstly, if the business has gone through the route of equity, then they would take a portion of the debt to create leverage. Secondly, many businesses don’t want to go through the complicatedprocess of IPO and t日本伴手禮,hat’s why they opt for a route to take debt from the banks or financial institutions.
In the end, it depends on the investment objective and risk appetite of the investors and how long are they willing to part away with their funds. When constructing a portfolio as well either or both these instruments can be included to enhance the possibility of returns.