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    Funds Presentation in Accounting

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    वैभव शिरोडे
    This document provides an overview of owned funds versus borrowed funds for a business. Owned funds refer to capital that is raised or contributed by shareholders and includes equity share capital, preference share capital, share premium, and retained earnings. Borrowed funds represent money that is owed to lenders in the form of loans, bonds, or other debt instruments with repayment terms and possible interest. The main differences between the two are that owned funds do not need to be repaid but provide partial ownership, while borrowed funds are debts that must be repaid usually with interest, though the interest paid is tax deductible.

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    Funds Presentation in Accounting

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    वैभव शिरोडे
    61 views17 pages
    This document provides an overview of owned funds versus borrowed funds for a business. Owned funds refer to capital that is raised or contributed by shareholders and includes equity share capital, preference share capital, share premium, and retained earnings. Borrowed funds represent money that is owed to lenders in the form of loans, bonds, or other debt instruments with repayment terms and possible interest. The main differences between the two are that owned funds do not need to be repaid but provide partial ownership, while borrowed funds are debts that must be repaid usually with interest, though the interest paid is tax deductible.

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    This document provides an overview of owned funds versus borrowed funds for a business. Owned funds refer to capital that is raised or contributed by shareholders and includes equity share capital, preference share capital, share premium, and retained earnings. Borrowed funds represent money that is owed to lenders in the form of loans, bonds, or other debt instruments with repayment terms and possible interest. The main differences between the two are that owned funds do not need to be repaid but provide partial ownership, while borrowed funds are debts that must be repaid usually with interest, though the interest paid is tax deductible.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    61 views17 pages

    Funds Presentation in Accounting

    Uploaded by

    वैभव शिरोडे
    This document provides an overview of owned funds versus borrowed funds for a business. Owned funds refer to capital that is raised or contributed by shareholders and includes equity share capital, preference share capital, share premium, and retained earnings. Borrowed funds represent money that is owed to lenders in the form of loans, bonds, or other debt instruments with repayment terms and possible interest. The main differences between the two are that owned funds do not need to be repaid but provide partial ownership, while borrowed funds are debts that must be repaid usually with interest, though the interest paid is tax deductible.

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    INSTITUTE OF INTERNATIONAL BUSINESS & RESEARCH

    PRESENTATION ON
    OWNED FUNDS Vs BORROWED FUNDS

    Presented by:
    Vikas Singh Rawat Vikas Shukla

    Road map: WHAT IS FUNDS? TYPES OF FUNDS? WHAT IS OWNED FUNDS? WHAT IS BORROWED FUNDS? WHAT ARE THE DIFFERENCE BETWEEN OWNED

    & BORROWED FUNDS?

    FUNDS
    Funds refers to all the financial

    resource of the company. Funds has been understood as cash only. Funds is a working capital. Working capital is the excess of current assets over current liabilities.

    STRUCTURE OF FUNDS
    FUNDS
    OWNED FUNDS
    Equity share capital Preference share capital Share premium Retained earning

    BORROWE D FUNDS
    Term loans Debentures Deferred payment liabilities Other long-term debts

    WHAT IS OWNED CAPITAL?


    Owned funds represents the amount contributed by

    the owners of a business which some times include shares with retain earning. Owned funds is the capital amount which is raised or contributed by the members of the company.

    The owners of a business are known as shareholders. There are two types of shareholders- Preference shareholders & Equity shareholders

    Advantages of Preference shareholders:The Preference Shares carry limited voting

    right through they are a part of the capital, As an instrument of financing the cost of capital of preference shares is less than that of equity shares. The preference shares financing may also provides a hedge against inflation.

    Limitation of Preference shareholders: The cost of capital of preference share is higher than

    the cost of debt, The compulsory redemption of preference shares after 20 years will entail a substantial cash outflow from the company. If the company is not able to earn a return at least equal to the cost of preference share capital, then it may result in decrease in EPS for the equity shareholders.

    Advantages of Equity Financing:


    You can get underway without the burden of debt on

    your back. prospectus for your investors. Depending on who your investors are, they may offer valuable business assistance.

    Disadvantages of Equity Financing:


    Investors do expect a share of the profits. Need to check with the Securities and Exchange

    Commission to see the requirements before you make decisions for investments.

    WHAT IS BORROWED FUNDS:


    A borrowed funds can be defined as an amount owed

    to a person or organization for funds borrowed. Borrowed can be represented by a bond, loan mortgage or other form stating repayment terms and, if applicable, interest requirements.

    Advantages of investing in bonds: Bonds are predictable or well predetermined.


    Bonds are more steady then stocks. The interest rates paid by bonds typically exceed those

    paid by banks .

    Disadvantages of bonds: Unlike stocks, bonds don't offer the possibility of high

    long-term returns. Companies and municipalities can and do go bankrupt.

    Advantages of Debt Financing: Debt financing allows you to have control of your own

    destiny regarding your business. The interest you repay on your loan is tax-deductible. The lender(s) from whom you borrow money do not share in your profits. You can apply for a Small Business Administration loan.

    Disadvantages of Debt Financing: If you dont make loan payments on time , you can ruin

    your credit rating and make borrowing in the future difficult or impossible. For a new business, commercial banks may require your personal assets before sanction of loan. Any time you use debt financing, you are running the risk of bankruptcy.

    Difference between owned Vs Borrowed funds


    OWNED FUNDS BORROWED FUNDS

    It is also known as

    It is also known as debts.

    equity. Investor received partial It involves borrowing money from lenders & ownership in the investor. company in exchange for their funds. It does The full amount which is not have to be repaid. borrowed will be repaid It involves money only in future usually with from owners. interest.

    It provide dividend to It provide interest to the shareholder. the owners. Dividend payable are Interest payment is tax deductable. not tax deductable. Require regular interest No payment payments .Company requirement. It may must generate cash flow received dividend but to pay. only out of retained earning. It has little or no impact It requires shared of the company. control of the company and may imposed restriction.

    WE REALLY APPRECIATE YOUR PATIENCE AND KIND ATTENTION FOR MAKING OUR PRESENTATION SUCCESSFUL..

    THANK YOU !!!!!

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