Debt financing is raising money for working capital of the business by use of loans. The loan would either be short term or long term which would be obtained though selling of bonds, notes, bills or organize for a bank loan depending on the size and preference of the company. The company is obligated to repay the principal amount with an interest rate which is agreed with the lender. Such financing is advantageous and disadvantageous to the company as follows;…
The company is divided on whose interest they would honor the lender is interested on the loan to be paid back with interest while the stockholders want to maximize their returns by being paid more on dividends (Peavler, 2009). This make the company to be in dilemma whether they should convince the stakeholder to take less divided and the rest be put back to business operations so that it would be able to generate more to pay the loan…..
Whirlpool Corporation mostly has its target market to mostly retailer and its net income of approximate 2.5% as compared to its revenue. It is the least profitable company of the three and I would recommend that it should have low debt ratio credit ration to be so it could be able to service the debt much more conveniently. The reason why I suggest it should have low rate debt it that it has low profit and also its products are only bought when people have already met….
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