Why companies replace long-term debt with equity?
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aldwin
Apprentice
Joined: 06 Aug 2005
Posts: 4
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 Posted: 09/01/08 - 10:40 Post subject: |
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| I have started a business and I expect to get a pretty good profit from it. I will be mostly in trading and I seek to assure the best possible position. I would thus like to know why companies replace long-term debt with equity. If anyone could help me regarding that matter, it would be great. |
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obadiah
Apprentice
Joined: 22 Mar 2007
Posts: 2
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| Posted: 10/01/08 - 00:17 Post subject: |
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| Trading is indeed one pretty tough thing to do. You need a lot of knowledge, a lot of skill and courage to make the right moves. On the other hand, it is not just that. Risks are involved and you need to run a good and responsible business. The debts often occur, but are nevertheless quite manageable, and the more company has of equity, the more capacity it has to sustain long term debts. That is precisely the reason why companies make the replacements, so they can gain leverage for some further debts. Hope you find the info helpful. |
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