Types of financing

publish Opened 2023-05-02. Branched out as I was writing Why Chinese investors throw so much money into real estate.

Related to career notes.

Equity financing: sale of stock for money. Effectively, selling shares of your company to raise capital from public investors.

Debt financing: loans that the company must pay back. The lender has no control over the business’ operations. However, once you’re in debt, your company must seek a low debt-to-equity ratio because creditors look more favorably upon such a metric and may allow additional debt financing in the future because of it.

Not sure how this part fits in but I wanted to document it —

Retained earnings: the cumulative net earnings of a company. Such earnings aren’t paid out to shareholders as dividends; they are retained by the company.