It would be interesting to consider what happens in practice by looking at some examples of companies and other organisations and the sources of finance shown on their financial statements.
To begin to answer these questions it is helpful to calculate the gearing for the company based on the data from the latest Annual Report. The gearing ratio is an indicator which is often used to assess the sources of finance of a business and the level of risk associated with them, and to make comparisons between companies, or look at trends over time. The gearing ratio expresses the total long-term debt (total non-current liabilities) as a proportion of the total long-term funding (total non-current liabilities plus total equity).
So, how is your organisation or another you are interested in actually funded? Or perhaps there is another organisation which you are interested in learning more about? What is the rationale behind the funding sources used by those organisations and do you think it is appropriate?
Note that there are alternative ways of measuring gearing which you will find in different sources (such as debt/equity). So that we can discuss comparisons between different companies it would be good for all of us to use the same method, calculating gearing as the level of non-current liabilities as a proportion of the total funding, as shown in the module e-book (McLaney & Atrill, 2020: 268).