Choose ONE (1) question below to discuss and then respond to TWO (2) of your classmates answers (Try not to repeat others answers). Include the question with your response.

1. What is depreciation expense and what is its purpose? What type of long-term assets are subject to depreciation and what factors are needed to calculate depreciation?.
2. What is the difference between a current and a long-term liability? Provide an example of each in the healthcare sector.
3. What is debt financing? Identify ONE advantage and ONE disadvantage of debt financing?
4. What is equity financing? Identify ONE advantage and ONE disadvantage of equity financing.
5. Why is it important to calculate the future value of a dollar borrowed today?  What is the future value formula?

Make sure you are properly citing your source(s) and providing your reference(s) for information you obtain from another source. Please review the Discussion Expectations and Grading posting if you have any questions regarding answering the discussion question and/or responding to your peers.

SOLUTION

Option 4. What is equity financing? Identify one advantage and one disadvantage of equity financing.

Equity financing is a funding technique adopted by firms to get funds from investors by issuance of shares in the organization in exchange for a stake in the company. This means of financing does not call for the acquisition of a loan by the business to finance the many projects that it has. He noted that investors obtain an interest in the industry and therefore are stakeholders; their profit is dependent on the business’s financial performance (Reiter & Song, 2021). These returns can be received in the form of a dividend, a payment made directly from the company’s earnings, or capital appreciation, which is the increase in the price of the company’s stock. Equity financing is employed most often in startups, new and growing firms, and businesses that require a huge cash infusion for expansion, mainly because it offers large sums of cash without the pressure of short-term debt.

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