After reading this article you will learn about over and under capitalisation of a company. Over-Capitalization of a Company: An over capitalized firm can be compared to a (fat) man who has got fat more than required and suffers from variety of diseases. Over-capitalization implies that the total capital of the company (owned capital plus borrowed capital) is in excess [...]
This article throws light upon the top twenty sources of finance for a company. The sources are: 1. Preference Shares 2. Debentures 3. Ordinary Shares 4. Non-Voting Ordinary Shares 5. Redeemable Equity Shares 6. Stock 7. Retained Profits 8. Loan Capital 9. Sale and Lease Back 10. Equipment Leasing 11. Hire Purchase 12. Term Loans (Straight) 13. Term Loans 14. [...]
After reading this article you will learn about the concept of capital gearing and factors affecting it. Concept of Capital Gearing: Assume that a company can issue three types of securities, i.e., equity shares, preference shares and debentures. But what should be the proportion of these securities. For this purpose, we shall study Capital Gearing. Capital Gearing determines the ratio [...]