The Finance For A Long Term Finance Essay

1046 Words Jun 26th, 2015 null Page
The finance available for a long period especially three years and above is known as long-term. That is, repayment of the long-term finance can be done after three years. These finances are mainly used to purchase fixed assets. The popular long-term finance sources are owner 's capital, share capital, long-term loans, debentures, government loans and grants. Since Care UK provides health and social care services, it is very easy to get government loans and grants for their expansion.

Share Capital: Share capital is the capital raised by a firm by issuing their shares in the markets. Shareholders are also owners of the company and the liability towards them are limited. The company is in profit, shareholders have a right to receive dividends based on the profitability. Care UK can use share capital for purchasing fixed assets like land and buildings. The share capital can be divided into two; 'preference share capital and equity share capital. ' The company has to pay a fixed rate of interest to preference share holders. They also have a right to return of capital. The equity share holders are the real owners of the company and have the right to vote. In the case of loss, they are the people who suffer first. But if the company is in profit, equity share holders will be getting after paying the entire claim. The main advantages of share capital are; very easy way in order to arrange capital, big amount of funds can be collected, and it is a long-term financing. The…

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