KB Homes

Definition

KB Homes is one of the largest home-building companies in the United States, specializing in designing and constructing residential properties. It raises capital through various means including equity, debt, and retained earnings to fund its projects and operations.

5 Must Know Facts For Your Next Test

1. KB Homes often issues common stock to raise equity capital.
2. The firm uses debt instruments like bonds to secure long-term financing.
3. Retained earnings are a significant source of internal funding for KB Homes.
4. The Weighted Average Cost of Capital (WACC) is crucial for KB Homes when evaluating the cost-effectiveness of their financing options.
5. KB Homes' financial strategy includes balancing between debt and equity to optimize its WACC.

Review Questions

• What are the primary methods KB Homes uses to raise capital?
• How does KB Homes utilize retained earnings in its financial strategy?
• Why is the WACC important for KB Homes in making financing decisions?

Related terms

Equity Financing: Raising capital through the sale of shares in the company.

Debt Financing: Raising funds by borrowing money through instruments like loans or bonds.

Weighted Average Cost of Capital (WACC): A measure that calculates a firm's cost of capital from all sources, weighted by their respective use.