Abstract
Depending on its life cycle and strategy, a firm has different financial needs. These financial needs could be fulfilled by internal or external resources. The sources of internal financing is cash flows. External financing could be debt and/or equity. When a firm uses debt, the interest rate it pays is the remuneration of the lenders (i.e. banks). In the case of equity it is different, the firm does not have to pay a contractual interest rate. The shareholders' profit depends on the company's performance. This profit is determined by the gap between the amount they invested at a time period "t" to get a given number of share "X" and the value of these shares at a time period "t+n". A stockholder realizes a capital gain when the value of the shares he holds is higher than the value at which he has purchased them. A shareholder could also get dividends. A dividend is a payment in cash or in stocks made by a company to its stockholders.
