Explain how an organization can use stocks, bonds,and leases as long-term finance alternatives?
Explain long term financing options for organizations- Finance Accouncting Question
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Answer by currious about calculations
First, there are public and private organizations that use these strategies for long-term financing. But, for answering this question, I shall only refer to public companies.
First, public companies arrange for public financing through investment banking firms like Morgan Stanley, Merrill Lynch, etc. Bonds are basically loans to the corporation from the public. These will be paid first if the company goes belly up. Stocks are sold to share-holders who are also owners of the company. That money is then put to use in the company for purposes such as research and development, mergers and acquisitions of other companies, paying employees, etc. Long-term leases are basically loans to the company from a real-estate management firm that allows the corporation to occupy space.
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