EQUITY SHARE CAPITAL PREFERENCE SHARE CAPITAL RETAINED EARNING

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SOURCES OF FINANCE

SHORT TERM
TRADE CREDITS CREDIT FROM SUPPLIERS ADVANCE FROM DEALERS

LONG TERM
PURCHASE OF FIXED ASSETS FUNDING EXPANSIONS DIVERSIFICATIONS

LONG TERM FINANCE

OWNED FUNDS

BORROWED FUNDS

SHARES

RETAINED EARNING

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SHARES
A SHARE HAS BEEN DEFINED BY THE INDIAN COMPANIES ACT, 1956 SHARE MEANS SHARE IN THE SHARE CAPITAL OF THE COMPANY & INCLUDES STOCK EXCEPT WHERE A DISTINCTION BETWEEN STOCK & SHARE IS EXPRESSED OR IMPLIED. THE LIABILITY OF THE SHAREHOLDER IS LIMITED TO THE EXTENT OF THE FACE VALUE OF THE SHARES.

A SHAREHOLDER- MEMBER OF THE COMPANY

NUMBERS OF MEMBERS (MEMBERSHIP ) IN CASE OF A COMPANY PRIVATE COMPANY PUBLIC COMPANY

MINIMUM MAXIMUM

2 50

7 UNLIMITED

AUTHORISED CAPITAL

ISSUED CAPITAL

UNISSUED CAPITAL

SUBSCRIBED CAPITAL

UNSUBSCRIBED CAPITAL

CALLED UP CAPITAL

UNCALLED CAPITAL

RESERVE CAPITAL

PAID UP CAPITAL

CALLS IN ARREARS (UNPAID CAPITAL)

SHARES

EQUITY SHARES

PREFERENCE SHARES

EQUITY SHARES
RISK BEARING CAPITAL NO FIXED RATE OF DIVIDEND RIGHT TO VOTE

OWNERS OF THE COMPANY

RIGHTS OF EQUITY SHAREHOLDERS

THE RIGHT TO RESIDUAL INCOME
RIGHT OF CONTROL PRE-EMPTIVE RIGHT

RESIDUAL CLAIMANTS OVER ASSETS

ADVANTAGES OF EQUITY SHARES TO THE ISSUING COMPANYPERMANENT SOURCE OF CAPITAL NO FIX DIVIDEND CREDITWORTHYNESS OF THE COMPANY

DISADVANTAGES OF THE EQUITY SHARES

TO THE ISSUING COMPANY-

NOT A TAX-DEDUCTIBLE EXPENSE

FLOATATION COST IS HIGHER OVER CAPITALISATION

DILUTION OF CONTROL

ADVANTAGES OF EQUITY SHARES

TO THE SHAREHOLERSHIGHLY PROFITABLE SHRES OWNERS OF THE COMPANY

LIMITED LIABILITY

DISADVANTAGES OF EQUITY SHARES

TO THE SHAREHOLERSRISK CAPITAL

CONTROL OVER THE MANAGEMENT FLUCTUATION

PREFERENCE SHARES
PREFERENCE SHARES ARE THOSE SHARES WHICH ENJOY PRIORITIES IN THE PAYMENT OF DIVIDEND AS WELL AS IN THE REPAYMENT OF THE CAPITAL

PREFERENCE SHAREHOLDERS ARE ENTITLED TO RECEIVE A FIXED RATE OF DIVIDEND BEFORE THE DIVIDEND IS PAID TO THE EQUITY SHARESHOLDERS.

TYPES OF PERFERENCE SHARES

1. PARTICIPATING AND NON PARTICIPATING SHARES
2.REDEEMABLE AND IRREDEEMABLE SHARES 3.CUMULATIVE AND NON CUMULATIVE SHARES

4.CONVERTIBLE AND NON CONVERTIBLE SHARES

FEATURES OF PREFERENCE SHARESHYBRID SECURITY PREFERENCIAL RIGHTS PREFERENCIAL RIGHT ON FIXED DIVIDENDS. DEMAND UNPAID ARREARS VOTING RIGHTS CONVERSION OF SHARES RIGHT TO SHARE SURPLUS PROFITS

ADVANTAGES OF OWNED FUNDS

INDICATES THE OWNERS STAKE AND INTEREST CUSHION FOR RAISING BORROWED FUNDS PROPOTION NO OBLIGATION SAFETY TO THE LENDERS RIGHT TO ACTIVE PARTICIPATION

RETAINED EARNINGS
INSTEAD OF DISRTIBUTING THE ENTIRE PROFITS TO THE SHAREHOLERS, COMPANY RETAINS SOME PROFITS FOR THE PURPOSE OF1. ACCUMULATIONS OF EARNINGS 2.INVESTMENT IN FIXED ASSETS 3.TO MEET WORKING CAPITAL NEEDS

MERITS OF PLOUGHING BACK OF PROFITS

TO THE COMPANYECONOMICAL EFFICIENCY AND PRODUCTIVITY CONFIDENCE OF SHAREHOLDERS ENHANCES CREDITWORTHYNESS LESS FINANCIAL RISK REPAYMENTS OF DEBENTURES AND TERM LOANS

REDUCES THE RELIANCE HELPS EXPANSION AND DIVERSIFICATION HELPS AUTOMATION AND MODERNISATION USED TO MEET WORKING CAPITAL NEEDS FOLLOWS A STABLE DIVIDEND POLICY FREEDOM TO TAKE THEIR OWN DECISIONS

TO THE SHAREHOLDERS
APPRECIATION IN SHARE VALUES BONUS SHARES REGULAR DIVIDENDS SECURITY VALUE TO THE SOCIETY INCREASES CAPITAL FORMATION HELPS SPEEDY DEVELOPMENT BENEFITS TO THE CONSUMERS SOCIAL WELFARE ACTIVITIES

DEMERITS OF PLOGHING BACK OF PROFITSDANGER OF MANIPULATION CHANCES OF OVER CAPITALISATION IMPROPER USE OF RETAIN EARNINGS NO SHARE OF DIVIDEND LEAD TO EXCESSIVE SPECULATIONS LEAD TO MORE DEMENDS FROM EMPLOYEES CONCENTRATION OF ECONOMIC POWER IN FEW HANDS

DETERMINANTS OF INTERNAL FINANCING

TOTAL EARNING OF THE ENTERPRISE TAXATION POLICY OF THE GOVERNMENT DIVIDEND POLICY GOVERNMENT ATITUDES AND CONTROL OTHER FACTORS

MERITS OF INTERNAL FINANCING ADVANTAGES RO THE COMPANYBEST AND CHEAPEST SOURCE OF FINANCE STABLE DIVIDEND POLICY INCREASE IN MORALE OF MANAGEMENT SAFETY FROM TRADE CYCLES

ADVANTAGES TO THE SHAREHOLDER

INCRAESE IN THE VALUE OF THE SHARE INCREASE IN EQUITY INCREASE IN THE COLLATERAL VALUE OF SHARES

ADVANTAGES TO THE SOCIETY

CAPITAL FORMATION INCRAESE IN SOCIAL WELFARE

DEMERITS OF INTERNAL FINANCING

DANGER OF MONOPOLY FEAR OF OVER-CAPITALISATION LOSS OF SHAREHOLDERS

Group membersAnkita Joshi- 210

Anuja Rane- 231 Shradhangi Date- 208 Ranal Nair- 223 Prathamesh Kulkarni- 218

Praful Shetty- 240

THANK YOU