Capital markets feature heavily in business and it is hard to imagine that the world ever got along without them. They have evolved from a small secluded market to large concerns which cannot escape the attention of all members of society. The features of capital markets are many. These capital market features include a high …
In a capitalist society profits play a crucial role in creating incentives for business owners and entrepreneurs. The reward of profit encourages innovation, costs cutting and improvements in business operations in addition to meeting the needs and wants of the community effectively. What is profit in business Profit is the surplus obtained after all the …
A company’s dividend policy affects the performance of its share price and the overall value of the company. The dividend policies chosen must align with the company’s goals and objectives in addition to maximising the company’s value to its shareholders. There are 4 main types of dividend policies: regular dividend, stable, irregular and no dividends. …
Depositories are necessary for several reasons. They provide security for the bearer of financial instruments and provide liquidity in the market. They offer consumers a place to make both time and demand deposits. Due to the increase in the number and volumes of security transactions depositories were introduced. Dealing with securities in the physical form …
It is a long-held view that the more a financial system develops the more the corresponding economy develops. In this school of thought, the role of financial systems in economic development is ancillary. Many empirical studies support this belief. It does follow that as an economy develops there are likely to be more complex and …
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An important consideration of any business is the capital structure and funding. It is important because it affects matters of cost of capital, internal rate of return, liquidity and internal growth rate. It is not a simple of electing to largely finance via debt or equity. There many determinants of the capital structure that a …
The ideal capital structure is determined by a firm’s financial manager. Deciding to take on debt or to issue more ordinary shares in order to finance business operations should be done after considering a lot of factors. Choosing debt means that a firm will have to pay back the debt with interest whether or not …
The goal of all businesses is to grow. As such owners, management, financiers and investors are all incredibly concerned with tracking the growth of businesses they are linked to. Growth can, of course, be financed from internal sources or external sources or a combination of both. Where growth is funded from internal sources it is …
Short term financing sources can be Trade creditors, Factoring services, Bill discounting, Advances from customers, working capital loans from banks, fixed deposits, receivables and payables. What is short term financing Short term financing refers to financing business operations for less than one year. Short term financing is also referred to as capital financing. It arises …
Sources of finance are classified based on the time period for which the money is required. Some of the sources for long term finance include, share capital or equity shares, preference capital/shares, retained earnings, debentures/bonds, term loans from financial institutions and commercial banks as well as venture funding to name a few. What is long-term …