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The company issuing stocks is doing it for a reason, to raise capital! An organization must choose the capital mix that allows them to function properly. This is a key point when analyzing businesses from various industries. Do you suppose a company like Boeing that makes aircraft will have the same equity mix as an organization like Walmart, or Betty Crocker? Some companies are very labor intensive and require little machinery or capital equipment. Other organizations have very little labor and are heavily invested in buildings, land, and machinery. How do you suppose the equity needs differ between these types of organizations?

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Accounting Basics, Accounting

Category:- Accounting Basics
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