How can a company finance fixed assets?

Question:

How can a company finance fixed assets?

Fixed Assets:

Fixed assets are major purchases for things like equipment, buildings, and land that are used long-term and are difficult to convert to cash. Fixed assets are listed on the company's balance sheet under "Current Assets".

Answer and Explanation:

Companies can finance fixed assets by debt financing or equity financing.

In debt financing, the company might take out a loan from a bank to pay for the assets such as a mortgage. A business can also pay for fixed assets by investing their profits into them or by selling stock in the company in a process known as equity financing.


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What Is Financing? - Definition & Types

from Corporate Finance: Help & Review

Chapter 8 / Lesson 7
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