Unlike Equity Financing, Debt Financing Does Not Require an Entrepreneur

question 13

True/False

Unlike equity financing, debt financing does not require an entrepreneur to dilute her/his ownership interest in the company.

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Definitions:

Costs

The monetary valuation of effort, material, resources, time, and opportunity foregone in production and delivery of a good or service.

Retention Ratio

The proportion of a company's net income that is retained rather than paid out as dividends, indicating reinvestment back into the company.

Return on Assets

A financial ratio that indicates how profitable a company is relative to its total assets.

Internal Growth Rate

The maximum rate at which a company can expand using only internal financing without resorting to borrowing or selling equity.