Experience shows that profitable companies prefer self-financing (profitable companies prioritize their sources of financing from internal financing). In this way, management can most easily escape the scrutiny of banks as providers of capital, new shareholders or partners, but also the vigilance of competitors as well as unwanted attention from the public (business press; politicians). In this way, there is no need to disclose information about possible investments or planned business objectives. – The fact that this assumption corresponds to reality can be seen from the fact that successful companies have a low debt to equity ratio compared to the sector average. – See foreclosure, equity, cost of total capital, leverage (effect), immunization, capital, internal, leverage, mezzanine capital, subordinated loans, zero distribution, rate of loan customers.
Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent!
University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/