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10 cards from this deck
How a business finances its long-term operations and growth
Equity (share capital) and borrowing (loan capital)
Money raised by selling shares to investors
Money raised through bank loans and other forms of debt
Measures proportion of long-term capital from borrowing
(Loan capital / total capital) × 100
Above 50%; heavy reliance on borrowing, greater financial risk
Below 50%; more equity finance, safer financial position
Greater interest obligations regardless of profits
Increased costs, reduced profit margins, more vulnerability
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