Drawbacks and Limitations of Debt Financing as a Source of Finance

Corporate Financial Management
(Part A)

Table of content
Introduction
Overview of case
Debt financing
Types of debt financing
Conclusion
References

INTRODUCTION
Sound financial structure is important for company's well being as well as growth.
Corporate need funds for running daily operations of the business as well as for expansion
purposes. For growth and expansion, company requires huge funds with long term payback
period (Davydov, 2016). The power point presentation is based on assessing drawbacks
and limitation of debt financing considering as a source of finance.

Overview of case study
RR Ltd. is a company based in the United Kingdom. RR Ltd is a fashion store that trades
on the Alternative Investment Market (AIM). After a brief and meaningful marriage
between Rebecca and Roy Race, the firm was created 10 years ago. The firm has expanded
quickly, and it now has two famous own branded stickers: RR, which caters to intermediate
women, and Racey, which caters to younger women. Company is going for external
sources of capital generation and has two options in consideration: debt financing and
equity financing.