1. Meaning EANING
Working capital is also called circulating capital (operating expenses). The capital of a business is used for day-to-day operations. it is calculated as the current assets minus the current liabilities.
It is also called circulating capital (operating expenses). The capital of a business is used for day-to-day trading operations, it is calculated as the current assets minus the current liabilities.
Working capital is obtained by the Short term loans, Overdraft, Dealer advances, etc.
4. Objective of Investor
The investor invests money in working capital for getting immediate returns in a short period.
Investment in working capital involved less risk.
6. Period of Capital Needs
Working capital is used for a shorter period of up to one year.
7. Decision Making Authority
In the case of working capital investment, the decision is made by middle and lower levels of management.
Shares that carry preferential rights are known as Preference shares. Preference shareholders enjoy preference regards dividend payment and repayment of capital.
2. Rate of dividend
The rate of dividend in the Preference share is fixed. Preference shareholders get a fixed dividend rate.
3. Refund of capital
Preference shareholder has prior right to refund the capital over equity capital
4. Nature of Capital
Preference share capital is ‘safe capital’ with giving stable returns.
5. Nature of Investor
The investors, who are not ready to take the risk, invest in preference shares.
A Preference share is convertible
7. Redeem ability
It is redeemable
8. Voting Right
Preference shareholders do not enjoy normal voting right.
Preference shares are subject to less risk, because of the fixed dividend rate and preferential to the repayment of capital
Debentures are an acknowledgment of debt issued by a company under its common seal.
Debenture capital is borrowed capital and it is a temporary capital.
Debenture capital is borrowed /loan capital. a debenture holder is only a creditor of the company.
4. Voting rights
The debenture holder doesn’t enjoy voting right.
5. Return on investment:
Debenture holders receive interest as a return on investment.
Debenture can be converted into shares.
Debenture capital being loan capital is secured against assets of the concerned company.
The debenture is classified as
Transfer of Shares
Transmission of Shares
Transmission of shares refers to the transfer of ownership to his legal representative because of the operation of law at the time of death or insolvency, etc. of the members.
2. When done:
Transmission of share is done when the member dies or becomes insolvent or insane.
3. Nature of Action
It is an involuntary action due to Insolvency or death, etc. It is due to the operation of law.
4. Parties involved
One party involved in the transmission of share i.e. legal or personal representative, the nominee of the member just in case of death or insolvency.
5. Instrument of transfer:
Transmission of shares does not require Instrument.
6. Initiated by
The legal representative initiates the process of transmission.
No consideration is involved here. The person who is entitled (legal representative) or official receiver need not pay for the shares.
Original liability of shares continues to exist just in case of transmission of shares.
9. Stamp Duty
In the case of Transmission of share, No need to pay.
The final dividend is that the dividend that’s declared in Annual General Meetings (AGMs) and paid annually after the close of the financial year.
2. Who Declares:
It is decided and recommended by the Board of Directors in the Annual General Meeting and declared by the shareholders in the AGM (Annual General Meetings).
It is declaration does not need authorization by the Articles of Association.
4. When Declared
It is declared at the Annual General Meeting of the company
5. Rate of Dividend
The rate of the final dividend is always higher than the Interim Dividend.
It is declared from different sources like; current year’s profits, free reserves, capital profits, Money provided by Govt. for dividends, etc.
7. Accounting Aspect
It is declared only after the accounts of the year are prepared and finalized.
It is a component of the financial market where long-term borrowings take place.
2. Time period
In the capital market, the instruments traded have a maturity period of more than one year.
Stocks, Shares, Debentures, Bonds, Securities of the government are the instrument of the capital market.
4. Purpose of borrowing
Long-term funds are required to establish a new business, expand or diversify the business, or purchase fixed assets.
Stock exchanges, Commercial banks, and Non-bank institutions, financial intermediaries, etc. are the participants in the market.
In The capital market, the risk is more as compared to in the money market. The reason behind this is the instruments have a long maturity period.
7. Return on Investment
Return on investment in the capital market is comparatively high as they are riskier.
8. Role in Economy
This market helps in the mobilization of savings in the economy.
The securities issued earlier are traded in the secondary market.
2. Mode of Investment
Indirect investment as the securities are acquired from other stakeholders.
3. Parties in action
The parties dealing in this market are only investors.
The security brokers are the intermediaries.
5. Value of security
The price of the security is fluctuating, depending on the demand and supply conditions in the market.
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