Is debt an alternate of equity?

Financial advisors often say: buy low, and sell high. Now, investors or firms with no debt and good credit rating or a handful of cash can buy a lot of good investment properties in good locations (with more selections and competitive prices) in this low economic time.  Mortgage brokers love to offer them the loans with rock bottom interest rates just like those new car dealers--this is why in most situations, rich is rich, and debt is debt. However, many people consider debt as an alternate of equity.

    For the question:  Is debt a substitute of equity? Mehar (2005) analyzes and examines  through Global 500 firms and claims that " debt and equity are not alternative sources of finance...leverage ratio of a company depends on its operational and financial activities including sales, profits, inventories and working capital... The combination of debt and equity may vary from industry to industry... [and] debt cannot be applied as a substitute of equity" (p.1).  In order to advance in optimal allocation of financial resources, the whole approach of our financial guidelines or culture needs to alter, vary or redesign (Mehar, 2005). 

Reference

Mehar, A. (2005, March, 1).  Is debt a substitute of equity? Relevancy of financial

     policy in current economic scenarios. Applied financial economics, 15(5),337.

     Retrieved January 07, 2009 from ProQuest Database.