The finance is needed for purchasing land, building,machinery furniture, and for initial expenditure. It is just like a dream to think of establishing a business without sufficient finance.
Once the business is established, finance is needed to purchase raw materials, pay carriage, wages, salary, etc., only ample finance can run the business successfully.
The Goodwill of business can be enhanced through prompt payment. Companies enjoying a good reputation can get loans quickly.
A business can survive during a period of recession only by having finance in plenty.
To run a business enterprise smoothly, finance is of the utmost importance.
In the absence of adequate finance, neither business can be conducted efficiently, nor can it expand it.
The size of a business depends on the availability of finance. The more the availability of money, the larger size of the company.
The petition before studying equity share as a source of long term finance it will be better to understand the meaning of the term share capital that is mobilized by issuing shares is called share capital information regarding the maximum amount of capital to be obtained by issuing shares is mentioned in the memorandum of association of each company it is registered it is called registered company till this register capital is divided into smaller units of a given amount it small unit of the registered capital is called the share for example if the registered capital of the company is 100000 and the
Same is divided into 10,000 equal parts of 10 rupees each then its 10 rupee part is called the share capital collected by issuing equity share is called equity share capital in its absence no company can be conceived those investors to home equity shares are issued are called equity shareholders they are actual owners of the company they have the full right to vote in the shareholders participate in the management of the company indirectly the rate of dividend on equity shareholders in the event of winding up of the company equity shareholders are paid back capital only after paying capital to preference shareholders it can therefore be said that the maximum risk is borne by petition holder advantages of equity shares both the investors and the company are benefited by equity shares gift to investors to participate in managerial activities to earn more by way of divide and 2 and capital profits advantages to company arrangement of permanent capital no fixed by an increase in capital no need of mortgage.
Preference shares make preference shares long-term, and medium-term financing needs of the company as compared to equity shareholders. The following two preferences are accorded to preferences shareholders dividend is paid to them before equity shareholders rate of compensation paid to the preference shareholders is determined in the event of a company facing liquidation it is the preference shareholders who are paid back their capitals in preference to equity shareholders preference shareholders have no right to vote in the meetings of the company but under section 87a of Indian companies act they have the right to vote under exceptional circumstances.
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