Various Sources of Finance

1
Ordinary shares (Equity pay)
is when the Company owners sell their smart set pedigree to individuals or institutional investors and then(prenominal) they became a company shareholders and what they bring for the investment is profit in form of dividends .Size of dividends depends on profit.

Advantages of unexceptional shares (equity Finance )
The amount what was injected into the business does not need to digest back ,because it is a permanent character of corking.
Owners can obligate huge amount of money to start their businesses.
If the company follows the dividends indemnity then it give create large reserves for its increment program .
If the company unable to bedevil profit then shareholders does not need to be paid.
Easy to issuing shares .
It will help to reduce gearing ratio

Disadvantages of ordinary shares (equity finance )
Issuing shares can take longer occlusive of prison term .
It incurs issuing shares
Legal and obligatory issues to follow when issuing shares
calamity to loose control ,if an investor buys more then 50% of do share value.
The control of business can be manipulated if the mass of equity is controlled by shareholders.
If dividend per share fails ,it can result over-capitalisation.
chapiter structure can not be change,due sold shares.





2
discernment share issue (equity finance)

Advantages
Management can take in effective control over the company ,because shareholders has no voting right.
If the company make a loss then shareholders dont need to be paid.
If the company make large profit preference personal credit line holders,paid by only ,agreed interest rate.
Huge amount of capital can be obtain ,money is not refundable because is permanent source of capital.
Preference shares are redeemable.

Disadvantages
Preference share holder target fixed rate of interest even if the company make a small profit.
Taxable income is not reduced by preference dividends .
Issuing shares can take longer period of time,
Legal and obligatory issues to...If you want to get a full essay, order it on our website: Orderessay



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