Final answer:
Investing activities include transactions like selling equipment, as it relates to the sale of non-current assets. Borrowing money and issuing stock are forms of financing but are not categorized as investing activities. Firms choose financing options based on control, shareholder responsibilities, and financial strategies.
Step-by-step explanation:
Investing Activities and Accessing Financial Capital
Investing activities pertain to transactions involving the sale of non-current assets and investments by a company. The correct answer to the student's question of what investing activities include among the provided options is d) Selling equipment. Borrowing money, issuing stock, and purchasing inventory represent other forms of financing but are not classified as investing activities.
When a firm needs to access financial capital, it has several options:
- Borrowing through banks or issuing bonds, which necessitates scheduled interest payments regardless of the firm's income levels.
- Issuing stock, which dilutes ownership but reduces the dependency on debt repayments.
- Reinvesting profits, which involves using the firm's past earnings to finance new projects.
A firm's choice in financing impacts its control, obligations to shareholders or creditors, and its overall financial strategy.