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SOURCES OF FINANCE💰 - Coggle Diagram
SOURCES OF FINANCE💰
EQUITY SHARES📈
- Ownership and real risk bearers🏅
2.Voting rights
ADVANTAGES
- High security🔐
- no collateral security needed❌🔐
- no immediate liability
DISADVANTAGES
- Risky investment⚠️
- Not tax-deductible❌📃
- Dividend at a discretion of Directors👨⚖️
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DEBENTURES📝
ADVANTAGES
- Issuing is cheap📃
- No dilution of control🎛️
- Best for depression periods
1.Borrowed capital is divided into equal parts
- Pays interest at regular intervals⚖️💵
- Creditor of the company🏦
DISADVANTAGES
- High liability📈
- Charged against assets
- Not meant for weak firms
COMMERCIAL BANKS🏦
ADVANTAGES
- Banks provide timely assistance to business ⌛
- Raising of funds is easy💰
- Provide loan at competitive interest rate🎯
DISADVANTAGES
- Funds are available for short periods⌛
- procedure is slightly difficult
- Sometimes difficult terms and conditions are imposed📃⚠️
1.Accepts deposits from the public and gives loans to the clients.🏦💰
- Used for working capital, project funding and credit facilities.
BONDS📝
ADVANTAGES
- Retention of ownership🔒👑
- Access to large capital
- Tax deductible interest 📃✅
- Corporate debt instruments💰
- Long- term borrowing at fixed or floating interest rates⚖️
DISADVANTAGES
- Mandatory payments⌚💵
- Impact on credit rating
- Increased financial risk⚠️