Page 181 - F3 -FA Integrated Workbook STUDENT 2018-19

Capital structure and finance costs

Sources of finance

1.1 Capital structure

The content of this chapter will focus upon limited liability companies. Like any
business, companies need to be financed. Finance is provided by capital investment
in the company, either in the form of debt (loan) capital or equity (share) capital.

Debt Equity

Holders of debt are Equity holders are not
entitled to some form of entitled to any
mandatory repayment. mandatory repayment.
e.g. interest, repayment Instead they share the
of capital. ‘residual assets’ of the
business when it ceases

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