Enterprise financing methods and their respective advantages and disadvantages are as follows:

1. Absorbing direct investment

That is, the enterprise adopts the method of absorbing investment from the state, legal persons or individuals, and the investment absorbed Investment can be made in cash, in kind, industrial property rights, land use rights, etc.

1. Advantages of absorbing investment:

(1) It is conducive to enhancing corporate credibility;

(2) It is conducive to forming production capacity as soon as possible;

(3) It is helpful to reduce financial risks.

2. Disadvantages of absorbing investment:

(1) The cost of capital is high;

(2) It is easy to disperse corporate control.

2. Issuance of common stocks

1. Advantages of common stock financing:

(1) No fixed interest burden;

( 2) There is no fixed maturity date and no need to repay;

(3) Financing risk is small;

(4) It can increase the company’s credibility;

(5 ) has fewer financing restrictions.

2. Disadvantages of common stock financing:

(1) High capital cost;

(2) Easy to disperse control rights;

(3) New shareholders sharing the company’s earnings accumulated before issuing new shares will reduce the net income per share of ordinary shares, which may cause the stock price to fall.

3. Issuance of preferred shares

1. Advantages of using preferred shares to raise funds:

(1) There is no fixed maturity date and no need to repay the principal;

(2) Dividend payment is both fixed and flexible;

(3) It is conducive to enhancing the company's credibility.

2. Disadvantages of using preferred shares to raise funds:

(1) High financing costs;

(2) Many financing restrictions;

(3) Heavy financial burden.

4. Issuing bonds

1. Advantages of bond financing:

(1) Lower capital cost - lower than stock financing cost;

(2) Guarantee control;

(3) Can exert financial leverage - when the company's earnings are good, bondholders only receive fixed interest, and more earnings can be distributed to shareholder.

2. Disadvantages of bond financing:

(1) High financing risk - it has a fixed maturity date and regular interest payments;

(2) There are many restrictions - the restrictions are much stricter than the issuance of preferred stocks and short-term debt;

(3) The amount of financing is limited - when the company's debt ratio exceeds a certain level, the cost of financing will rise rapidly, and sometimes Not going out.

5. Issuance of convertible bonds

That is, during the validity period of the bond, only interest will be paid. On the maturity date of the bond or a certain period of time, the bond holder has the right to choose to convert the bond into Convert shares of the company's common stock at a specified price. If the option is not exercised, the company will cash out the principal on the maturity date of the bond.

1. Advantages of convertible bond financing:

(1) Loan repayment costs are lower than ordinary bonds, and financing costs are lower; (2) Flexibility is strong and easy to issue, Convenient to raise funds; (3) Conducive to stabilizing stock prices;

(4) Compared with the issuance of new shares, it reduces the dilution of earnings per share and company equity due to capital expansion; (5) Reduces the interest in financing conflict. 2. Disadvantages of convertible bond financing:

(1) Compared with the issuance of ordinary bonds, equity may be diluted, and the repayment flow of mature interest is uncertain;

(2) In a bull market, it is more direct to issue stocks for financing than to issue convertible bonds;

(3) In a bear market, if the convertible bonds cannot be forced to be converted into shares, the company's debt repayment pressure will be greater;

(4) Compared with the issuance of ordinary bonds, it may expand the total equity of the company and dilute the earnings per share.

6. Financial institution loans

1. Advantages of financial institution loan financing: (1) Fast financing speed;

(2) Low financing cost—— Based on the current situation in my country, compared with issuing bonds;

(3) Borrowing flexibility is good - you can directly negotiate with the bank to determine the time, amount and interest of the loan. 2. Disadvantages of loan financing from financial institutions:

(1) High financial risk - regular repayments of principal and interest are required, and there are greater risks in adverse operating conditions; (2) Many restrictive clauses - such as Submit relevant reports regularly and are not allowed to change the purpose of the loan;

(3) The amount of financing is limited - banks are generally unwilling to lend huge amounts of long-term loans. 7. Venture capital market financing

1. Advantages of venture capital market financing:

(1) An important financing method in the start-up stage of high-tech enterprises;

(2) It is conducive to cultivating small and medium-sized high-tech enterprises and promotes the development of my country's high-tech industry; (3) It is conducive to the integration of institutional innovation, financial innovation and technological innovation

(4) Supporting small and medium-sized technology enterprises Change the internal governance structure towards demutualization and standardization.

(5) It has a huge role in promoting the industrialization of scientific and technological achievements and promoting the development of technology diffusion and professional division of labor. 2. Disadvantages of venture capital market financing:

(1) The venture capital market has the characteristics of high risk and high growth, and its investment funds have significant cyclical liquidity characteristics;

(2) Most venture capitalists or venture capital funds participate in business management or implement direct supervision, and shareholders have a very strong influence on the company;

(3) High risk - mainly reflected in technical risks, information Risk, market risk, management risk, etc. 8. Financial leasing

1. Advantages of financing leasing:

(1) Fast financing - leasing and equipment purchase are carried out at the same time;

(2) ) Fewer restrictive terms - compared to bonds and long-term borrowings;

(3) The risk of equipment obsolescence is small - the lease term is 75 years of the asset's useful life; (4) The financial risk is small - the rent is Apportioned throughout the entire lease period;

(5) Light tax burden - rent can be deducted before tax, which has the effect of deducting income tax. 2. Disadvantages of financing leasing:

The cost of capital is high - the rent is much higher than the interest borne by bank borrowing or issuing bonds; 9. Commercial credit financing

That is, using Purchase goods on credit, advance payment, commercial bills and other commercial credit for financing. 1. Advantages of commercial credit financing: (1) Financing convenience; (2) Low financing cost; (3) Few restrictions.

2. Disadvantages of commercial credit financing:

The term of commercial credit is generally shorter. If the company obtains a cash discount, the time will be even shorter. If the company gives up the cash discount, it will have to pay Higher cost of capital.