FINANCIAL MANAGEMEN

T

Presented By – Shilpi Chakraborty

Himani Chauhan

Neetu Goswami

Guided By – Miss Bushra

INTRODUCTION

INTRODUCTION

“Financial management comprises forecasting, planning, organising, directing, co-ordinating and controlling of all activities relating to acquisition and application of financial resources of an undertaking in keeping with its financial objectives.”

The company can raise finance from internal as well as external sources. Share capital is one of the most important source of funds.

SHARE CAPITAL

Share capital is the amount

that a company can raise or has raised by issue of shares.

CLASSIFICATIONOF

SHARE CAPITAL

CLASSIFICATION OF SHARE CAPITAL

1. AUTHORISED SHARE CAPITAL It is stated in memorandum of

association. It is the maximum share capital under each class that a company can issue.

2. ISSUED SHARE CAPITAL It is the part of authorised share

capital that has been issued to public for subscription. Issued share capital can’t exceed the company’s authorised share capital.

3. Subscribed share capital It is the part of issued share capital. Shares applied for subscription.

4. Called-up share capital It is the amount of nominal value of shares that has been called-up by the company for payment by the subscribers towards the shares.

5. Paid-up capital It is that part of called-up capital which the members of the company have paid. Paid-up capital should be equal to called-capital.

SHARES

The capital of the company

is divided into units of

small denomination & each unit

is called a share.

ADVANTAGES &DISADVANTAGE

SOF

SHARES

Advantages :-The company does not need to repay this share capital, but instead agrees to distribute future profits to shareholders in return for their investment.Dividend is paid only when the company earns profits.Disadvantages :-The disadvantage of issuing shares is that tax has to be paid on the amount of dividend of the owner’s fund.

TYPESOF

SHARES

EQUITYSHARES

Residual rights (remaining rights)

Rate of dividend is not fixed

Carry voting rights

Equity shareholders sink & swim with the company

Preferential rightsRate of dividend

is fixedDo not carry

voting rightsPriority at the

time of payment as well as repayment

PREFERENCESHARES

TYPESOF

PREFERENCESHARES

TYPES OF PREFERENCE SHARES

Cumulative preference shares These are those preference shares which carry right to receive arrears of dividend before dividend is paid to the equity shareholders.

Non-cumulative preference sharesThese are those preference shares which do not carry right to receive arrears of dividend.

PARTICIPATING PREFERENCE SHARES These are those preference shares which are entitled to a fixed rate of dividend & enjoy right to participate in the surplus profit after paying dividend to equity shareholders at a certain rate.

NON-PATICIPATING PREFERENCE SHARES These are those preference shares which do not carry right to participate in the profits remaining after equity shareholders have been paid dividend.

Redeemable preference shares These are those preference shares the amount of which is repayable by the company to the preference shareholders after the time specified for their repayment.

Irredeemable preference shares These are those preference shares the amount of which is not repayable by the company to the holders of such shares unless the company is wound up.

Convertible preference shares These are those preference shares which are convertible into equity shares.

Non-convertible preference shares These are those preference shares which are not convertible into equity shares.

THANK YOU