Ajilal Term Funds

8/12/2019 Ajilal Term Funds

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SOURCE OF BUSINESS

FINANCE


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Source Of Business Finance

When choosing a source of finance, there are three

terms:

Short term Up to one year Medium term Between one and five years

Long term Over five years

When deciding which term to choose, the business

should consider carefully:

What they need the money for

How much they have available to meet the

repayments


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The main sources of finance available to business

are:

1. Short Term Finance

Trade Creditors

Bank Overdraft

Expenses Due


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The main sources of finance available to business

(continued):

2. Medium Term Finance

Term Loan

Leasing

Hire Purchase


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Long-term sources of finance

1. Equity Capital (Issue of Ordinary Shares)

The company sells shares in the business to raise

money

Dividends may be paid to the shareholders out of the

profits each year

No interest has to be paid on the money raised

Each new shareholder has a say in the running of the

company


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SHARES



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Share

A share is one of the units into which the total

capital of a company is divided. Sec 2 (46) of the

companies Act defined a shareas a share in the share

capital of a company and include stock.


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Kinds of Shares

Section 86 of the Companies Act 1956 recognizes

only two kinds of shares,

Equity or Ordinary Shares

Preference shares


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Equity or Ordinary Shares

According to Section 85 of Companies Act 1956an equity share is a share which is not a

preference share. These are shares having no

special rights, either for dividend or for repayment

of capital on winding up. The holders of equityshares participate in the profits available after all

preferential rights have been fully satisfied. They

are not entitled to any fixed rate of dividend. They

are the real owners of the companies, having votingrights.


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Preference Shares

These are the shares which enjoy preferential

rights as to the payment of dividend at a fixed rate

during the life of the company and as to the return

of capital on winding up of the company over theequity shares.


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Type of Preference Shares

1. Cumulative Preference Shares

2. Non-cumulative Preference Shares

3. Participating Preference Shares

4. Non-participating Preference Shares

5. Redeemable Preference Shares

6. Irredeemable Preference Shares

7. Convertible Preference Shares

8. Non-Convertible Preference Shares


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THANK YOU

Prepared by AJI R LAL

Ajilal Term Funds

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