What types of financing supports non-profit and for-profit organizations?

Expert Solution

Types of financing which will be supporting profitable organisation will be related to equity financing and debt financing and preference financing which is a mixture of both debt and equity.

The firm will be trying to go for internal financing and external financing as well and they will be trying to have an optimum balance of various kind of financing in order to maximize their rate of return.

Non profitable organisation will generally have a higher amount of equity and they will not be trying to take debt capital in order to to enhance their operations because they does not have that much of certainty of making a higher amount of profit from their operations because they are non profitable organisation and hence they will be trying to operate through a higher amount of Equity.

Profitable organisation will generally look for generation of an optimal capital structure and optimal mean of financing which will be having a lower cost and a higher rate of return so that will help in creation of the organisational wealth.

jeff jeffy answered 1 year ago

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