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An established company has decided to expand its production capacity.it does not have adequate reserves to finance the expansion.suggest with reasons any two other sources of finance of the company.

Posted by Natasha Mishra 3 years, 6 months ago

CBSE > Class 11 > Business Studies

1 answers

Gaurav Seth 3 years, 6 months ago

following are the two sources of finance that an established company can opt to expand its production capacity-
- Issue of shares- the company can issue share (equity and preference) as per its requirement in order to finance its expansion project. company has to pay an annual dividend on these shares. the decision regarding providing dividend is totally in the hands of management.

- issue of debentures- another source through which a company can finance its project is Debentures, it is th fixed charge liability against which company has to pay interest on regular intervals. debenture may be issued for short term and long term period but practically it is issued for a long term period.

other sources are loan from banks, loans from financial institutions etc

1Thank You

ANSWER

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