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InterviewSolution
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Ananya is running a small café by the name of Green Tokai. It is earning profits and she wishes to expand her business by opening a bigger outlet. She needs additional funds for the same but she does not wish to rely on borrowed funds to expand her business. Name and briefly explain two sources of finance which she can use. Also state two reasons why she does not want to raise borrowed funds |
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Answer» The two sources of finance she can use to expand her business are Share capital- Capital obtained by issue of equity shares and preference shares is called the share capital. Equity share capital is the prerequisite for the formation of a company. The preference this shareholder enjoy a preferential position over the equity shareholders and Retained earnings. A portion of the net earnings may be retained in the business for use in the future. This is known as retained earnings. |
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