Financial Concepts and Principles

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Debt Financing?

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Borrowing money that must be repaid with interest over time, often through loans or bonds.

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Equity Financing

Back

Raising capital by selling ownership shares in the company, typically through stocks, without repayment obligations.

Front

Character, Capacity, Capital, Collateral, Condition.

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What are the 5C's of Credit?

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Character

Back

The borrower's trustworthiness, reputation, and history of repaying debts.

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Capacity

Back

The borrower's ability to repay the loan based on income and existing financial obligations.

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Capital

Back

The borrower's financial assets or net worth that show their investment or stake in the venture.

Front

Collateral

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Assets pledged by the borrower to secure the loan in case of default.

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Condition

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External factors, such as the economy and industry trends, that could impact the borrower's ability to repay.

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loan agreement

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A legally binding contract between a lender and a borrower that outlines the terms and conditions of the loan.

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Common Stock

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Represents ownership with voting rights and variable dividends.