Final answer:
Northwest Wholesale Foods is using equity financing by selling common stock, which involves selling shares of the company to the public and providing a share of profits and voting rights to the shareholders. the answer is equity financing
Step-by-step explanation:
When Northwest Wholesale Foods sells common stock, the company is using equity financing. This method of raising capital involves selling ownership shares in the company to public investors. The buyers of common stock are then entitled to a share of the company's profits, which may come in the form of dividends, and they may also have voting rights that can influence the governance of the business.
Equity financing is an alternative to debt financing, where a company borrows money and has to pay it back with interest. Selling common stock does not incur debt, but it does dilute the ownership among a larger pool of shareholders. This source of funding can be advantageous for companies needing capital to expand operations, invest in new projects, or pay off existing debts.