51427995-long-term-financing

51427995-long-term-financing - SOURCES OF LONG TERM FINANCE...

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Unformatted text preview: SOURCES OF LONG TERM FINANCE • Finance is the life blood of a business Sources of finance:- • Short term sources • Long term sources Purpose of long term finance :- • To finance fixed assets • To finance the permanent part of working capital • To finance the growth and expansion of a business Factors determining long term sources of finance:- • Nature of business • Nature of goods produced • Technology used EQUITY CAPITAL TERMS: Authorized, Issued, Subscribed & Paid- up Capital. Par/ face Value, Issue Price, Book Value, Market Value. Rights Of Equity Share Holders: Right to Income Right to Control Pre – emptive Right Right in Liquidation EQUITY CAPITAL PREFERENCE CAPITAL • Hybrid form of Financing • Equity Features:-out of distributable profits-dividends not tax deductible-Priority over Equity shares in case of bankruptcy • Debenture features:-dividend rate is fixed-capital is redeemable-normally no right to vote PREFERENCE CAPITAL Retained Earnings Depreciation INTERNAL ACCRUALS •...
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This note was uploaded on 05/28/2011 for the course SUNDERLAND 103 taught by Professor Mr.leo during the Summer '10 term at Uni. Sunderland.

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51427995-long-term-financing - SOURCES OF LONG TERM FINANCE...

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