¶ … funds has its own advantages and disadvantages. In that regard therefore, debt financing could in some instances be more appropriate than equity financing. The reverse is true. This text concerns itself with some of the benefits FedEx Corporation would experience were it to raise funds through debt. The text also highlights some of the drawbacks of such a move.
Debt Financing: Focus on FedEx
FedEx, as it points out on its website, "provides customers and businesses worldwide with a brand portfolio of transportation, e-commerce and business services" (FedEx, 2014). As it further points out, it has in the past been ranked amongst some of the most trusted and admired companies in the world (FedEx, 2014). The company's current chief executive officer is Frederick W. Smith.
Costs and Benefits of Debt Financing
To begin with, it is important to note that as Peavler (2010) points out, debt financing could benefit a company as the interest paid on a loan taken by the business is tax-deductible. In this case therefore, should FedEx decide to increase the proportion of its debt (in relation to equity); it would have a portion of its income shielded from taxes....
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