Business Infographics on LinkedIn: 4 Ways Companies Raise Capital Credits to Brian Feroldi, follow him for… | 10 comments (2024)

Business Infographics

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4 Ways Companies Raise CapitalCredits to Brian Feroldi, follow him for more useful content.------Here's the original post:How Companies Raise CapitalWatch these four balance sheet categories:1️⃣ SHORT & LONG-TERM DEBTPRO:- Lowest Cost of Capital- Tax-AdvantagedCON:- Paid Back on a Fixed Schedule- Too Much Debt Makes a Company Fragile2️⃣ CONVERTIBLE DEBTPRO:- Low Cost of Capital- Lower Interest Rate- Tax-Advantaged- Might Not have to be Paid Back with CashCON:- Might have to be Paid Back with Cash- Can be Dilutive when Converted to Equity- Interest Payments3️⃣ PREFERRED STOCKPRO:- Lower Cost of Capital than Common Stock- Dividend Payments can be FlexibleCON:- More Costly than Debt- Must be Paid Before Common Shareholder4️⃣ COMMON STOCK / PAID-IN CAPITALPRO:- Doesn’t Have To Be Paid Back- No Interest Payments- Lowest Risk for CompanyCON:- Dilutive, Especially when Issued at Low Valuations- Expensive if the Business SucceedsWhat's the "best way" for companies to raise capital?By not needing to raise capital at all!In other words, they are funding their own growth through retained earnings.But, when forced to choose, my preferred order is:1: Common Stock2: Convertible Stock3: Short/Long-Term Debt4: Preferred StockWhat's your preferred order?-------Follow Business Infographics to learn from the best visuals.

  • Business Infographics on LinkedIn: 4 Ways Companies Raise CapitalCredits to Brian Feroldi, follow him for… | 10 comments (2)

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Richard Venegar

Private Equity Veteran, Board Member - Brown Ventures, Financial Advisor & Former Vice Chair of the NAIC

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Getting your customers to pay you cash or pay you in advance is a form of raising capital. Also, getting your vendors to give you extended payment plans is another way of raising capital. There are other ways through government programs where you can obtain free capital.

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Hazzel Hassan

General Manager:Corporate Loan, Corporate Finance, Investment, Merger Acquisition, Private Equity, Property Investment, Plantation, Sukuk,Wakaf, REITs at Lembaga Tabung Haji

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Thank you 👍. Very good info to share. But for preferred stocks, the cost of capital is higher compared to common stock yes? Hence, the name "preferred" thus, should be under "cons", and it usually comes with higher risk (as in, higher risk=higher return i.e. higher cost of capital for investee but higher dividend/coupon for investor). Do kindly correct me if am wrong 🙏

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Dr. Pranay Singh

Insurance Consultant at Bajaj Allianz Life |Aspiring Dentist and Tactical CIA Field Agent| Cybersecurity Learner

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Very useful important and analytical content 👌 👏 👍

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Sumana Parvin

Project Delivery Manager at enevna

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enevna

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Brenda Sedgwick

Board Member | Certified Governance Coach | Registered Psychotherapist | Affirmed Clinical Supervisor

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Very helpful!

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Brian Feroldi

I demystify the stock market | Author, Speaker, Creator | 100,000+ investors read my free newsletter (see link)

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Thanks for sharing!

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Faizel Mootheril

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Wonderful, very helpful!

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Alex Lavin, MBA

Senior Regional Manager - Operations | Multi-Site Management | Business Development | Strategic Growth | Project Management

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Great graphic for a refresher!

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