👉 Funding math involves understanding how different sources of capital, such as equity, debt, and grants, impact a company's financial health and growth potential. Equity funding, provided by investors in exchange for ownership, increases capital but dilutes existing shareholders' stakes. Debt funding, through loans or bonds, requires repayment with interest but doesn't dilute ownership. Grants and subsidies offer non-repayable funds, often tied to specific goals or conditions. The math centers on balancing these sources to optimize growth, minimize costs, and maximize returns. For instance, a company might calculate the weighted average cost of capital (WACC) to determine the minimum return needed to satisfy investors, or use discounted cash flow (DCF) analysis to assess the value of future cash flows funded by different sources. Effective funding decisions require a deep understanding of financial ratios, valuation metrics, and market dynamics to ensure sustainable growth and profitability.
