Understanding Long-Term Finance and Shares in Business
Explore the importance of long-term finance, sources of financing, definitions of shares, and characteristics of shares in business. Learn about different types of preference shares and their significance in company capital structure.
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Presentation Transcript
ISSUE OF SHARES - II BBA
INTRODUCTION As we are aware finance is the life blood of business. It is of vital significance for modern business which requires huge capital. Funds required for a business may be classified as long term and short term and short term. We have learnt about short term finance. Finance is required for a long period also. It is required for purchasing fixed assets like land and buliding, machinery etc..
Sources of long term finance The main sources of long term finance are as follows shares Debentures Public Deposits Retained earning Term loans from banks Loan from financial institution
SHARES Definition: Shares can defined as one of the units into which the shares capital of a company has been divided. According to section 2 (46) of the companies Act, a share is the capital of a company and includes stock except where a distinction between stock and share is expressed implied.
Characteristics of shares It is a unit of capital of the company. Each shares is of a definite face value. A share certificate is issued to a shareholder indicating the number of shares and the amount. Each share has a distinct number. Shares are transferable units.
Types of preference shares Cumulative preference shares Non cumulative preference shares Redeemable preference shares Participating or non participating preference shares
