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PRESENTED BY :-
AKANKSHA SHARMA
CM-13203
EQUITY
VENTURING
DEBT
FUNDING
VARIOUS
LETTER OF SOURCES DEBENTURES
CREDITS OF
FINANCE
WORKING
RETAINED
CAPITAL
EARNINGS
LOANS
LOANS
Classification Of Various Sources Of Finance
b).Borrowed capital:
it refers to the capital arranged from outside sources comprises of debentures,
fixed deposits and bonds. These includes -
i).Financial institutions
ii).commercial banks
iii).The general public in case of debentures
3. According to source of generation :
Internal Sources
Internal sources of capital is the capital which is generated internally
from the business. They are as follows :
1).Retained profits
2).Reduction or controlling of working capital
3).Sale of assets etc.
External Sources
An external source of finance is the capital generated from outside the
business. Apart from the internal sources finance, all the sources are
external sources of capital.
1).Bank
2).Investor
3).Government
SHARES
TYPES OF SHARES
Equity shares
Preference shares
Equity Shares
Shares which enjoy dividend and right to participate in the management of Joint Stock
Company are called equity shares, or, ordinary shares. They are the owners and real
risk bearers of the company . They are eligible to share the profits of the company .the
shares given to equity shareholders in profits is called Dividend. At the time of
winding of company ,the capital is paid back last to them after all other claims have
been paid in full .
Preference Shares
Shares which enjoy preference as regards dividend payment and capital
repayment are called Preference Shares. They get dividend before equity
holders. They get back their capital before equity holders in the event of
winding up of the company.
The owners of these shares have a preference for dividend and a first claim
for return of capital; when the company is closed down. But, their dividend
rate is fixed.
Preference share can be of following types:
a) Cumulative Preference Shares - Such shareholders have a right to claim the dividend.
b) Non- Cumulative Preference Shares - They are exactly opposite to cumulative
preference shares.
c) Participating Preference Shares - Such shareholders have a right to participate in the
excess profits of the company, in addition to their usual dividend.
d) Non- Participating Preference Shares - Such shareholders do not have any right to
share excess profits. They get only fixed dividend.
e) Convertible Preference Shares - Such shares can be converted into equity shares, at
the option of the company.
f) Redeemable Preference Shares - Such shares are to be redeemed, or, paid back in
cash to the holders after a period of time.
g) Non- Redeemable Preference Shares - Such shares are not paid in cash during the life
of the company.
Merits of Preference Shares
a) Fixed dividend.
b) First claim on company assets.
c) Cost of capital is low.
d) No dilution over control.
e) No dividend obligation.
f) No redemption liability.