What are the various instruments through which the firms procure finance? For each of these instruments discuss when and why they should be used to raise capital. Also explain non traditional sources of long term financing used by firms.
Capital investment and financing decisions are critical aspects of corporate finance that involve determining how a company will fund its operations, projects, and growth initiatives. Firms have a range of instruments at their disposal to procure finance, and these can be broadly categorized into traditional and non-traditional sources.
### Traditional Sources of Finance:
1. Equity Shares:
- When to Use: Equity shares represent ownership in the company, and they are typically issued during an Initial Public Offering (IPO) or private placement. This source is suitable when a company is in the early stages of development, has a high growth potential, and wants to share the ownership risk with a broad base of investors.
- Why Use: Issuing equity shares provides permanent capital to the company without the obligation of regular interest payments. It is an excellent way to raise substantial amounts for large-scale projects and expansions.
2. Debt Financing:
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