Owned Funds.or Owners Fund:

I. Equity shares: Equity shares are those which are not preference share.

Merits of equity share to the company, Equity shareholder:

1. Equity shares are very good and permanent source of long-term finance for a company. 

2. The holders of equity shares are the real owners of the company, and so, they have voting rights in the management of the company.

Demerits of equity share to the company, Equity shareholder:

1. It costs more to finance with equity shares than with the preference shares or debentures. 

2. The equity shareholders cannot be sure of earning regular and fixed divined.

II. Preference shares: Preference shares are shares which have preferential rights in respect of payment of dividend during the existence of the company, and also in respect of repayment or refund of share capital in the event of winding up of the company.

Merits of Preference shares to the company, Preference shareholder:

1. Preference share are an important source of long-term capital for the company, as the preference share capital is required to be returned only after a long-period of 10 years. 

2. Preference shareholders get a fixed rate of dividend on their shares.

Demerits of Preference shares to the company, Preference shareholder:

1. Issue of preference shares involves several legal formalities, and as a result, preference shares become costly. 

2. The preference shareholders cannot be quite sure of getting dividend on their shares every year.

III. Re-investment of profits: The process of retaining a portion of distributable profits and utilizing them in the business es called ploughing-back of profit, self-financing or internal financing.

Advantages of ploughing back to the company, shareholders:

1. Retained profits reduce the dependence of company on external borrowings. 

2. Retained earnings provide security to shareholders against business uncertainties.

Disadvantages of ploughing to the company, shareholders:

1. Ploughing-back of profits is possible only when there is stability in earnings

2. Retained profits may depress the prices of shares of the company temporarily.