Back

Tarun Suthar

 • 

The Institute of Chartered Accountants of India • 2m

Equity vs. Debt - What’s Better for Business Funding? 🤔 Let’s break it down with a simple example: Both scenarios (A & B) start with the same revenue and cost structure. But there's one key difference - the funding source. Scenario A: Funded entirely through equity Scenario B: Funded with debt, incurring ₹500 interest Key Insight: Despite interest expense in B, the tax savings (₹150) make a significant impact. Result - Higher cashflow in Scenario B: ₹1050 vs. ₹900 in Scenario A. This is the power of the debt tax shield.🔥 However, while debt improves cashflow, it also increases financial risk. The optimal choice depends on your risk appetite and business stability. Moral: Leverage can work for you - if managed wisely. Note: Debt is better if ROI > Cost of Debt Would you go with equity or debt for your startup?

7 Replies
37
33
3
Replies (7)

More like this

Recommendations from Medial

Image Description
Image Description

Tarun Suthar

 • 

The Institute of Chartered Accountants of India • 5m

How to save Taxes!!! iykiyk -- Part 1. Taking Debt/Loan as funds is best way eliminate taxes than raising Equity shares. as Debt is charged against profits and interest is deducted before imposing tax rate. Also, Be sure that the ROI is higher tha

See More
11 Replies
8
17
1
Image Description
Image Description

Anirudh Gupta

CA Aspirant|Content ... • 14d

Daily dose of financial ratios by Anirudh Gupta Debt/equity ratio =Total debt/Shareholders equity Purpose: It helps users of financial statements understand how much debt the company is using for every ₹1 of equity invested by shareholders. Cred

See More
13 Replies
2
13
Image Description
Image Description

Account Deleted

Hey I am on Medial • 1y

why indian Startups are opting for Debt financing? 1. Preserving equity: Debt financing allows startups to raise capital without diluting their equity and ownership. This is important for founders who want to maintain control of their company. 2

See More
11 Replies
5
15
1

sumit agarwalla

Hey I am on Medial • 7m

Hi I am a F&B startup founder from Bangalore. we are doing 100% growth year on year . looking for investor for debt and equity.....

2 Replies
1
Image Description
Image Description

Sairaj Kadam

Entrepreneur • 11m

Understanding Debt Financing: A Crucial Funding Option Hey everyone! Today, let’s dive into debt financing, a vital funding method for startups. Unlike equity funding, where you give up ownership, debt financing involves borrowing money that you’ll

See More
3 Replies
8
14
Image Description

Amanat Prakash

Building xces • 3m

Day 1 Business Terms 1. Revenue vs. Profit – "Revenue is what you earn, profit is what you keep. A startup making ₹10L/month in revenue but spending ₹9.5L has only ₹50K profit. See the difference?" 2. Burn Rate – "How fast are you burning cash? I

See More
1 Reply
4
10
Image Description
Image Description

Anirudh Gupta

CA Aspirant|Content ... • 13d

Daily dose of financial ratios by Anirudh Gupta Debt service coverage ratio: =Earnings available for debt services/(Interest+Installments) Where earnings available for debt services are EBITDA or EBIT based on the case. Purpose: -Yesterday,we d

See More
4 Replies
3
11
1

Manik Gruver

Investment Lead at M... • 29d

Get Started - 11 Our Poll 7(medial.app/post/6845b975d8f52f7fe0a6717c) revealed that after "Juggling Cashflow" (which we've roasted enough), "Tax and Governance Tangle" is your second biggest headache! We’ve already unraveled the cashflow mess in ea

See More
Reply
8

Omkart

A SMM posting useful... • 3m

what does Burn rate mean in startup ecosystem? It is the rate at which the startup is using its raised capital to fund its overheads before generating any positive cash flow/sales. what does Debt Financing mean? A company can raise funds by issue

See More
Reply
3
11

Download the medial app to read full posts, comements and news.