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benefits and problems of capital (trade capital (disadvantages (Negative…
benefits and problems of capital
trade capital
advantages
Customer Loyalty
Competitive Advantage
Increased Sales
Incentives for Customers to Pay
disadvantages
Negative Effect on Cash Flow
Must Investigate Creditworthiness of Customers
Monitoring Accounts Receivable
Financing Accounts Receivable
Possibility of Bad Debts
equity capital
advantages
No Repayment Requirement
Lower Risk
Bringing in Equity Partners
disadvantages
Higher Cost
Time and Effort
Ownership Dilution
debt capital
advantages
maximise growth, profit and shareholder value
helps companies achieve financial goals with funding they would not otherwise have access to.
can use debt capital as a part of its capital structure
disadvantages
Keeps You From Accomplishing Your Financial Goals
Borrows From Your Future Income
the business have to pay back the money they borrow with an interest rate
costs money
working capital
advantages
It also provides a cushion for when your company needs a bit of extra cash
enabling you to satisfy your customers' orders, expand your business, and invest in new products and services.
more flexibility
disadvantages
Increases the threat of bankruptcy and liquidation
Leads to significant consequences for your company.
Leads to late payment to the suppliers.
Increases the customer debt.