Chapter

16.4. Raising Long-Term Financing*

From IntroductionToBusiness OP 8D04gAa

Concepts

1. Why might businesses choose factoring for short-term financing?

   "appliance industries. Factoring is more expensive than a bank loan, however, because the factor buys the receivables at a discount from their actual value. Exhibit 16.3 For businesses with steady ord

2. How should firms match long-term financing to their investments?

   "A basic principle of finance is to match the term of the financing to the period over which benefits are expected to be received from the associated outlay. Short-term items should be financed with s

3. What are the main differences between debt and equity financing?

   "Say that the Boeing Company plans to spend $2 billion over the next four years to build and equip new factories to make jet aircraft. Boeing’s top management will assess the pros and cons of both deb