Finance

Definition: Equity Shares can be defined as ordinary shares which represent fractional ownership of the holder in the business venture. It brings long-term capital to the company which is to be repaid only at the time of winding up of the company. The capital raised by issuing equity shares is known as equity share capital also known as owners fund, which is the primary as … [Read more...] about Equity Shares

Definition: Preference Shares refers to the shares that possess preferred position over other classes of shares, i.e. equity shares, as to the payment of dividend and repayment of capital, when the company goes to liquidation. The dividend to preference shareholders is either paid at a certain amount or at a certain rate. Further, the shareholders have no right to attend and … [Read more...] about Preference Shares

Definition: In financial management, leverage implies the quantum of debt or borrowed funds deployed by a firm to finance its operations, procurement of assets like inventory, plant, building, etc. expansion projects, acquisition of new business and so forth. It ascertains the firms potential in employing borrowed funds (long-term) that carry fixed return, in order to … [Read more...] about Leverage

Definition: Financial Crisis refers to a situation in which there is an acute decline in the value of assets. Also, the businesses and consumers are not able to pay off their debts and the banks face liquidity shortages. It is related to a bank run - a situation in which many investors sell their assets or withdraw money from their accounts, as they feel like the value of their … [Read more...] about Financial Crisis

Definition: Public Deposit can be described as a form of short-term financing, often unsecured in which the company invites deposits from the general public to fulfill its working capital requirements. In this, the general public, deposits money with non-banking companies. It is just like a loan raised by the company from the public. Here, the word public is an umbrella term … [Read more...] about Public Deposits

Definition: Dishonor of Negotiable Instrument refers to the state when the party who has to pay the sum in an instrument fails to honor it. In other words, it implies the loss of honor for the instrument indicating the unsuitability of the instrument to realize funds. Types of Dishonour On the dishonor of the negotiable instrument, the holder of the instrument must issue a … [Read more...] about Dishonor of Negotiable Instrument

Definition: Right Shares or Right Issue implies an invitation to the company's existing shareholders to buy additional new shares through a Letter of Offer. These shares are introduced, at a discounted price, i.e. the price at which the company's existing shareholders will buy the shares is lower in comparison to the market price of the shares. In general, the company brings … [Read more...] about Right Shares

Definition: Bonus Shares imply the free additional shares given to the existing shareholders, depending on the number of shares held by them. Bonus shares are the accumulated earnings of the company which are not given as dividends, rather they are transformed into free shares. It occurs when the company does not distribute profits, in the form of dividends, rather than it … [Read more...] about Bonus Shares

Definition: Forfeiture of Shares or Share forfeiture is a process in which the company's directors annul (cancel) the rights of a shareholder, who has not paid the call money due on time when the company demands and, even after receiving the notice for such non-payment. Conditions for Forfeiture of Shares There are certain conditions that are to be met before the forfeiture … [Read more...] about Forfeiture of Shares

Definition: Business Finance refers to that area of finance which deals with money and credit used in the business and how the money is raised. It is all about estimation, arrangement, and application of funds so that the business has sufficient cash to carry out operations effectively and efficiently, without any interruption. It involves activities like planning, raising, … [Read more...] about Business Finance