Professional Documents
Culture Documents
Finance 10
Finance 10
financing.
Equity financing involves raising capital by selling ownership stakes (equity) in the company.
In this type of financing, the company issues shares to investors, and in return, those
investors become shareholders with ownership rights. Importantly, the company retains
control over its operations, as equity investors are typically not involved in day-to-day
management decisions.
On the other hand, debt financing involves borrowing money that needs to be repaid over
time, typically with interest. While debt financing provides capital, it also creates an
obligation for the company to make regular interest payments and eventually repay the
principal amount. However, it does not dilute ownership or grant control to lenders.
In summary, the statement aligns with equity financing, as it emphasizes that the company
retains ownership and control while raising capital by issuing equity to investors.