Investing in Shares & Property

 Powered by Max Banner Ads 

When I play the Business Strategy Game (BSG), none of the companies have plenty of money in the year 11. Businesses need to raise funds using debt or capital. By financing your business through the debt, you accept the risk of bankruptcy. Bankruptcy occurs if you default on your loan for 3 consecutive years. By default your loan will also make your credit rating and stock price to fall. Equity is the alternative to debt to raise capital by stock sale. The share loss decreases the return on equity ratio (ROE) and earnings relative share (EPS). The advantage is that sales of shares there is no risk bankruptcy.

I learned an interesting strategy for success champions industry 2. The strategy is to build a financially strong company and sell shares at a price of the shares are high. Then, after the execution of an exercise in bad design, redeem the shares when the stock price sank. This allows your company to make enormous amounts of capital with a "wells and build" strategy of your company in the stock price manipulation. It is very risky and unethical, but also innovative and catches most companies by surprise. The notion of people buying small stocks and the sale of shares is high note in the collection funds through equity.

The increase in capital through the debt is to raise funds the traditional way which clearly shows his company into bankruptcy. However, Debt financing can be cheaper than equity financing of a very profitable business, because money can be paid a fixed annual rate, while the repurchases can be costly, with stock prices rising. The big drawback is that the debt is that it can weaken the profit margins every year for interest expense – A feature that equity does not.

Both debt and equity have their advantages and disadvantages when raising capital. Find the ratio of the law of equity debt will help your company finance its growth and profitability of winning the game of business strategy.

Get more helpful tips and BSG advice from a former BSG Grand Champion by visiting BSG Tips.

PT2 ALERT OIL DOLLAR POTENTIAL COLLAPSE