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    Mukul Kumar Sharma - MOF - PGDMBM5CM2125

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    Mukul Sharma Kumar
    Equity shares represent the ownership capital in a corporation. Shareholders own voting rights and claims to assets/income but also assume ownership risk. They are eligible for dividends after preferred shareholders that are determined by profits and directors' intentions. Financial institutions like IDBI, IFCI, ICICI provide medium and long term loans which are an important source of long term funding. They were established by the government at national and state levels to offer loans to industries. State level organizations like SFCs and SIDCs also provide financing.

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    Mukul Kumar Sharma - MOF - PGDMBM5CM2125

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    Mukul Sharma Kumar
    12 views2 pages
    Equity shares represent the ownership capital in a corporation. Shareholders own voting rights and claims to assets/income but also assume ownership risk. They are eligible for dividends after preferred shareholders that are determined by profits and directors' intentions. Financial institutions like IDBI, IFCI, ICICI provide medium and long term loans which are an important source of long term funding. They were established by the government at national and state levels to offer loans to industries. State level organizations like SFCs and SIDCs also provide financing.

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    Mukul Kumar Sharma_MOF_PGDMBM5CM2125

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    Equity shares represent the ownership capital in a corporation. Shareholders own voting rights and claims to assets/income but also assume ownership risk. They are eligible for dividends after preferred shareholders that are determined by profits and directors' intentions. Financial institutions like IDBI, IFCI, ICICI provide medium and long term loans which are an important source of long term funding. They were established by the government at national and state levels to offer loans to industries. State level organizations like SFCs and SIDCs also provide financing.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    12 views2 pages

    Mukul Kumar Sharma - MOF - PGDMBM5CM2125

    Uploaded by

    Mukul Sharma Kumar
    Equity shares represent the ownership capital in a corporation. Shareholders own voting rights and claims to assets/income but also assume ownership risk. They are eligible for dividends after preferred shareholders that are determined by profits and directors' intentions. Financial institutions like IDBI, IFCI, ICICI provide medium and long term loans which are an important source of long term funding. They were established by the government at national and state levels to offer loans to industries. State level organizations like SFCs and SIDCs also provide financing.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    Long-Term Sources of Finance

    Equity Shares: -
    The ownership capital in a corporation is represented by equity shares, also referred to as
    common shares. The owners of these shares are the company's legitimate owners. They hold
    all the company's voting rights and have unrestricted claim to its assets and income.
    Maximising the value of a company's stock shares is its main goal. They assume ownership
    risk as they are the business's owners. Once the preferred dividends have been paid, they are
    eligible for dividends. The amount of the dividend paid on these shares is not fixed and is
    determined by the availability of distributable profits and the directors' intentions.
    In prosperous times, they may receive greater dividend rates, but they also run the danger of
    receiving no pay-outs during difficult times. Like this, at the dissolution of the business, they
    may exercise their claim over any assets that remain after paying all other claims, including
    those of preference shareholders.
    Advantages Disadvantages
    Permanent Source of Fund High Cost of funds
    Increase in Borrowing Capacity No advantage of Trading on Equity
    Not Bound to pay Dividend Manipulation of groups of shareholders
    No Need to mortgage the Assets

    Loans From Financial Institution: -


    Another crucial source of long-term funding is financial institutions. The Government of
    India has established a variety of special financial institutions at the national and state levels
    to offer medium- and long-term loans to industrial companies.
    At the national level, financial institutions have been established, such as the Industrial
    Development Bank of India (IDBI), Industrial Finance Corporation of India (IFCI), Industrial
    Credit and Investment Corporation of India (ICICI), Industrial Reconstruction Corporation of
    India (IRCI), Unit Trust of India (UTI), Life Insurance Corporation of India (LIC), and
    General Insurance Corporation (GIC).
    State Financial Corporations (SFCs) and State Industrial Development Corporations are
    financial organisations created at the state level (SIDCs). For instance, the state of Haryana
    has formed the Haryana State Financial Corporation (HFC) and the Haryana State Industrial
    Development Corporation (HSIDC).

    Advantages Disadvantages
    Make the Raising of funds easier. Costly Source of Finance
    Help in maintaining good relationship with Restrictions on the use of Assets
    Financial Institution
    Help in collecting funds at the right time. Consequences of Defaults
    Make organizations more focused on Excessive Penalties
    profitable projects as they must pay interest
    on quarterly, half yearly and annual basis.
    Help in overall economic Development Not Entitled to tax Benefit
    Do not allow the interference of creditors, s
    who have provided term loans to the
    organization in the internal affairs of the
    organization.

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