Long Term Sources of Finance Presentation

A Presentation describing Various Long Term Sources of Financing or Funding for a Business Enterprise.

1. Long Term Sources of Finance By - Harshit H. Rajyaguru

2. The sources of funds refer to the mediums by which an organization raises its long-term capital and working capital. The organization can select any of the sources of funds depending upon the need and gestation period of the project to be financed. There are Two Main types of Sources of Funds: 1) Short Term Sources of Funds 2) Long Term Sources of Funds Sources of Funds

3. Sources of Financing

4. Long Term Sources of Financing Long-term finance can be defined as any financial instrument with maturity exceeding one year (such as bank loans, bonds, leasing and other forms of debt finance), and public and private equity instruments. IT is a Backbone of the Financial Strength of a Business Activity. Long Term Sources are Required to Purchase of Fixed Assets such as Plant, Machinery, Furniture and fixture etc.

5. Types of Long Term Sources of Funding

6. 1) Equity Shares Equity Shares are also termed as Ordinary shares or Common shares. Equity share holders are considered as Owners of The Company as they have Invested in the Company. Equity Share Holders get Dividend based on the Performance of the Company. Holders of this Shares are the last one to get their money back in the case of Liquidation of the Company.

7. Features of Equity shares

8. Advantages of Equity Share Capital

9. Disadvantages of Equity Shares

10. Example of Share

11. 2) Preference Shares Preferred stock is a form of stock which may have any combination of features not possessed by common stock including properties of both an equity and a debt instrument, and is generally considered a hybrid instrument. They have Certain Features of Equity and at the Same time Certain Features of Debentures.

12. Features of Preference Shares

13. Advantages of Preference Shares

14. Disadvantages of Preference Shares

15. 3) Debentures Debenture is used to issue the loan by government and companies. The loan is issued at the fixed interest depending upon the reputation of the companies. When companies need to borrow some money to expand themselves they take the help of debentures. Interest of Fixed Rate is Paid to the Debenture Holders by Respective Entity.

16. Features of Debenture

17. Advantages of Debentures

18. Disadvantages of Debentures

19. 4) Term Loans A term loan is a monetary loan that is repaid in regular payments over a set period of time. Term loans usually last between one and ten years, but may last as long as 30 years in some cases. A term loan usually involves an unfixed interest rate that will add additional balance to be repaid.

20. Features of Term Loans

21. Advantages and Disadvantages of Term Loans

22. 5) Lease Financing Lease financing is a contractual agreement between the owner of the assets (lessor) and user of the assets (lessee), whereby the owner permits the user to economically use the asset on the payment of periodical amount which is in the form of lease rent for a specific period of time. The title of goods remains with the owner (lessor) of the asset. It is the most important source of long term financing.

23. Advantages and Disadvantages of Lease Financing

24. 6) Venture Capital It is a private or institutional investment made into early-stage / start-up companies (new ventures). As defined, ventures involve risk (having uncertain outcome) in the expectation of a sizeable gain. Venture Capital is money invested in businesses that are small; or exist only as an initiative, but have huge potential to grow. The people who invest this money are called venture capitalists (VCs). The venture capital investment is made when a venture capitalist buys shares of such a company and becomes a financial partner in the business.

25. Features of Venture Capital

26. Advantages and Disadvantages of Venture Capital

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