2. LONG-TERM FINANCE
•Funds obtained for a time frame exceeding one year in duration.
•Needed to fund expansion projects, buy new premises, buy another
company etc.
4. EQUITY SHARES
• Permanent capital of the company.
• Voting rights on the basis of the shares they hold.
• Pre-emptive rights.
• Limited liability.
• No fixed rate of dividend.
5. PREFERENCE SHARES
• Preferential rights in respect of fixed rate of dividend.
• Priority at the time of repayment of capital.
• No voting rights and does not affect the existing control of the
company.
TYPES : -
• Redeemable and Irredeemable preference shares.
• Cumulative and Non cumulative preference shares.
• Convertible and Non convertible preference shares.
• Participating and Non participating preference shares.
6. DEBENTURES
• To be repaid at a definite time as stipulated in the issue.
• Low rate of interest payable.
• Fixed and regular income for investors.
• Interest on debenture is tax deductible.
TYPES : -
• Unsecured and Secured debentures.
• Bearer debentures.
• Registered debentures.
• Redeemable and Irredeemable debentures.
• Convertible debentures.
7. RETAINED EARNINGS
• Internal source of finance.
• Cost free source of finance.
• No dilution of control.
• Used for expansion, modernization and replacement etc.
• Reinvestment of surplus earnings in the business.
8. LOANS FROM FINANCIAL INSTITUTIONS
• FI’s : - Commercial Banks, LIC, Industrial Finance Corporation of India,
SFC, IDBI, State Industrial Development Corporation.
• Suitable to meet the medium-term demands of working capital.
• Fixed rate of interest and amount is repayable by the way of instalments
in a number of years.
