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13:27
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Originally posted by blister:
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What evidence bro ?! you are banging on about a CR which is a very specific form of acquiring money. Obtaining a loan is a different beast.When a company is not generating an income they issue shares as a form of equity in the entity so the fund provider has the capacity to extract a return on investment by selling the shares at a future date. This comes with risk so it is often done at a discount to the current market value of the company, thus ensuring their investment is somewhat insulated. When a company is generating cash flows they are able to borrow money against the forward projected revenues from the business. This is called a loan. the fund provider provides cash and charges an interest (a % of the money outstanding added to the original sum called the principal). In this way they receive their money back over time + a profit. No new shares are generated in this transaction.
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thanks sensei,
(20min delay)