Presentation on financial terms

Presented By: Lokesh Sharma

Share Capital

Equity Capital

Preference Capital

Authorized

Issued

Paid up

Partici pating

Cumu lative

Redee mable

Convertible

Face Value = Amount mentioned on share certificate irrespective of market price

Bonus Share

Issued to existing Shareholders. Issued without consideration of cash or kind. Converted from reserve & surplus Issued by companies where large accumulative free reserve exists i.e Out of free reserve. Can be issued by companies who have issued/ public Issue / right issue after twelve month AOA & Board approval needed. Specific reserve such as revaluation reserve share fluctuation reserve can not be used.

Advantage
Bridges

gap between capital and fixed assets.

Increases market price of shares. Create market reputation. Increases liquidity of shares. Create confidence of shareholders

Disadvantage

Increase of capital base. Leads reduction in EPS. Higher pay-out of dividend in future. Issued without receiving money Cannot be issued very frequently.

Stock Split
Issuing additional shares by reducing face value of stock to the existing share holder. for example:- Rs. 10 Face Value Per Share = Splited into Rs. 1 per share to 10 number.

Buy Back
1. Rarely done. 2. Legal formalities, SEBI, ROC, RESOLUTION, APPROVAL to be confirmed 3. Reduces capital base 4. Tools of restructuring capital

Stock split does not effect financial accounting of the company Issued when stock prices are very high. Wider Investor base can find easy to trade in market stock exchange. Average trading volume increases.

Indicates managements conviction to sustain higher profit growth.

SWEAT EQUITY Offer to the promoter or director. Issued at discount or for consideration other than cash providing know how. Lock in period generally three years.

Book Building Proportionate basis through tender office

Stock exchange

By Back

Open Market

odd lot holders

Employees stock option plan -ESOP

Aim is to retain intellectual capital. Employee & direct (holding less than 10% percent equity) can go No promoter

right , not an obligation granted to an employee. Issued at lower price. Always lock- in period. Employee become owner of the company to work with more dedicated and harder

Debenture

Cumulative

Non-Cumulative

Redeemable

Thank You