1.

Retained Earnings
Companies exist to make a profit by selling a product or service for more than it costs to produce. This is the most basic
source of funds for any company and hopefully the method that brings in the most money, and is known as retained
earnings. These funds can be used to reward shareholders in the form of dividend payments or share buybacks, but are
also used to invest in projects and grow the business.

2. Debt Capital
Like individuals, companies can and borrow money. This can be done privately through bank loans, or it can be done
publicly through a debt issue. These debt issues are known as corporate bonds, which allows a wide number of
investors to become lenders (or creditors) to the company. The drawback of borrowing money is the interest that must
be paid to the lender, where a failure to pay interest or repay the principal can result in default or bankruptcy. But, the
interest paid on debt is typically tax-deductible and costs less than other sources of capital.

3. Equity Capital
A company can generate money by selling part of itself in the form of shares to investors, which is known as equity
funding. The benefit of this is that investors do not require interest payments like bondholders do. The drawback is that
further profits are divided among all shareholders. Furthermore, shareholders of equity have voting rights, which means
that a company forfeits or dilutes some of its ownership control as it sells off more shares.