SOURCES OF LONG TERM AND SHORT TERM FINANCE FOR A PROJECT

ORDINARY SHARES
FEATURES Claim on income Claim on assets Right to control Voting rights Pre-emptive right Limited liability

ORDINARY SHARES
PROS AND CONS OF EQUITY FINANCING a) Permanent capital b) Dividend payment c) Cost d) Risk e) Earning dilution f) Ownership dilution

PREFERENCE SHARES
FEATURES a) Claim on income and assets b) Fixed dividend c) Cumulative dividend d) Redemption e) Sinking fund f) Participating feature

PREFERENCE SHARES
PROS AND CONS OF PREFERENCE SHARES a) Risk less leverage obligation b) Fixed dividend c) Non-deductibility of dividends d) Limited voting rights e) Dividend postponability

DEBENTURES
FEATURES a) Interest payment b) Maturity c) Redemption d) Sinking fund e) Indenture

DEBENTURES
PROS AND CONS OF DEBENTURES a) Less costly b) No ownership dilution c) Fixed payment of interest d) Obligatory payments e) Financial risk f) Restrictive covenants

TERM LOANS
Loans taken for a definite period of time For acquiring fixed assets, expansion, modernization, diversification etc., Bank and financial institutions are the main source of term loans in India.

TERM LOANS
FEATURES a) Maturity b) Direct negotiation c) Security Primary security Collateral security d) Restrictive covenants Asset-related , Liability related, Cash flow related, Control-related covenants. e) Convertibility

SOURCES OF SHORT TERM FINANCE

FEATURES a) Loan raised for a maximum period of one year is called short term loans. b) To meet working capital requirements

SOURCES OF SHORT TERM FINANCE

a) b) c) d) e) f) g) h) Loans from commercial banks Public deposits Trade credit Factoring Discounting bills of exchange Bank overdraft and cash credit Advances from customers Accrual accounts