Read through the merit enterprise corp. case study at the end of chapter 2 in principles of managerial finance (text) to develop ideas about the issues. And explain the following statement:

It would be better to use equity financing because the debt financing would tie up their primary financing source for future loans. Additional loans would be difficult to receive once the debt to income ratio reflected the $4 billion loan before the company was showing ROI.

Answer rating: 100% (QA)

The use of equity financing is the act of raising money for company activities by selling common or preferred stock to individual or institutional investors In return for the money paid shareholders r... View the full answer