Chapter seven explores concepts such as debt and equity, liquidity, market efficiency, common and preferred stock among others. The selected article authored by Salman and Munir (2012) discusses application of Debt and Equity and their implications on businesses perfomance. According to the article debt and equity are critical in determining how market conditions will affect a company’s share. The concepts are also applied as a source of financing in firms. Financing is realized by raising funds through equity and laying strategies to avoid debt ( Jordan, Miller & Dolvin, 2015) . The concept of equity financing is applied in determining business performance.
Raising equity for firms has a positive effect to business perfomance. Equity is crucial in funding intangible assets such as research and development. Debt and equity concepts profoundly discussed in the article are key in enabling business make financing decisions and assess the impact on organization performance ( Jordan, Miller & Dolvin, 2015) . Debt and equity are applied in determination of leverage, liquidity, profitability, divided payout ratio and price per earnings ratio.
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References
Covas, F., & Den Haan, W. J. (2012). The role of debt and equity finance over the business cycle. The Economic Journal , 122 (565), 1262-1286.
Jordan, B. D., Miller, T. W., & Dolvin, S. D. (2015). Fundamentals of investments: valuation and management . McGraw-Hill Education.
Salman, A., & Munir, N. (2012). Choice between debt and equity and its impact on business performance. International Journal of Organizational Innovation , 5 (1), 284-295. https://www.researchgate.net/publication/281859052_Choice_between_Debt_and_Equity_and_Its_Impact_on_Business_Performance
