Page 12 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Chapter 1

Equity finance

2.1 Equity finance

Companies can raise cash by selling their shares to investors.

Two main types of share exist.

 Ordinary Shares – carry voting rights, discretionary dividends

 Preference Shares – no voting rights, guaranteed dividends

2.2 Sources of equity finance

Share finance will be issued using either:

 capital markets – used for listed entities only. The company will
issue new shares.

 current shareholders – private companies can only issue shares
in this fashion. They do not have access to capital markets to
trade shares.

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