Page 161 - Corporate Finance PDF Final new link

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BRILLIANT’S Long Term Financing and Valuation of Goodwill & Shares 161

What do you mean by Term-Loan? Also write the main features of term loan.
bmoZ eãX go AmnH$m ³¶m Ame¶ h¡? bmoZ eãX Ho$ ‘w»¶ JwU ^r {b{IE&
OR
Briefly explain any two sources of long-term funds.
bm±J-Q>‘© ’§$S²>g Ho$ {H$Ýht Xmo òmoVm| H$m g§{já dU©Z H$s{OE&

Long-term Sources of Finance ’$m¶Z|g Ho$ bm±J-Q>‘© òmoV

Long-term financial needs generally refer ’$mBZoÝg H$s bm±J-Q>‘© Amdí¶H$Vm go A{^àm¶ ’$ÝS>
to those requirements of funds which are for H$s Cg Amdí¶H$Vm go h¢ Omo 5-10 dfm] go ^r A{YH$ H$s
a period exceeding 5-10 years. A firm requires Ad{Y Ho$ {b¶o hmoVr h¡& {H$gr ’$‘© H$mo bm±J-Q>‘© ’§$S> H$s
long term funds to acquire fixed assets and
Amdí¶H$Vm {’$³ñS> AgoQ²>g IarXZo Ho$ {b¶o ¶m H$a§Q>
to carry permanent portion of current assets
to ensure smooth flow of business activity. AgoQ²>g Ho$ na‘mZoÝQ> nmoe©Z H$mo Ho$ar H$aZo Ho$ {b¶o hmoVr h¡
All investments in plant, machinery, land & Vm{H$ {~OZog Ep³Q>{dQ>r AmgmZr go g§Mm{bV H$s Om gHo$&
building, etc. are considered as long-term ßbmÝQ>, ‘erZar, boÝS> Ed§ {~pëS>¨J ‘| {H$¶m J¶m BÝdoñQ>‘|Q>
financial needs. The finance manager has to bm±J-Q>‘© ‘mZm OmVm h¡& ’$mBZoÝg ‘¡ZoOa H$mo Eogo VarHo$
employ such means and mechanism by AnZmZo hmoVoo h¢ {OZH$s ghm¶Vm go dh BÝdoñQ>g© go Ano{jV
which he can acquire desired resources from
investor. T>§J go [agmog}g àmßV H$a gHo$&

Classification of Long-term Finance bm±J-Q>‘© ’$m¶Z|g H$m dJuH$aU
Capital market is one of the important H¡${nQ>b ‘mH}$Q> bm±J-Q>‘© ’$mBZopÝg¨J H$m EH$ _hÎdnyU©
sources of long-term financing. It includes a gmog© h¡& Bg‘| {d{^ÝZ àH$ma Ho$ ’$mBZopÝe¶b BÝñQ¯>‘|oQ²>g
wide variety of financial instruments including O¡go {H$ eo¶g© Ed§ {S>~oÝMg© em{‘b h¢ {OZH$s ghm¶Vm go
shares and debentures which facilitate flow of gaßbg ¶y{ZQ²>g go ’$ÝS> H$m âbmo S>o{’${gQ> ¶y{ZQ²>g H$s
funds from surplus units to deficit units. Va’$ hmoVm h¡&
Share Capital: Capital of the company is eo¶a H¡${nQ>b: H$ånZr H$s H¡${nQ>b N>moQ>r-N>moQ>r
divided into a number of small individual units BpÝS>{dOwAb ¶y{ZQ²>g ‘| {S>dmBS> hmoVr h¡ VWm à˶oH$ ¶y{ZQ>
and each such unit is called share. A share is EH$ eo¶a H$hbmVr h¡& eo¶a H$m AW© H$ånZr H$s H¡${nQ>b
nothing but a share in the capital of company ‘| EH$ {hñgm h¡ Ed§ g^r eo¶g© H$s EJ«rJoQ> d¡ë¶y {‘bH$a
and the aggregate value of shares is known as H$ånZr H$s eo¶a H¡${nQ>b ~ZVr h¡& Omo H$ånZr H$s eo¶a
share capital of the company. Those who H¡${nQ>b ‘| gãñH«$mB~ H$aVo h¢ do H$ånZr Ho$ ‘oå~g© ~Z OmVo
subscribe to the share capital become members
of the company and are called shareholders. They h¢ Ed§ eo¶ahmoëS>g© H$hbmVo h¢& CZH$m H$ånZr H$s Am°Za{en
‘| {hñgm hmoVm h¡& Bg{b¶o eo¶g© H$mo Am°Za{en {g³¶mo[aQ>rO
are the part owners of the company. Hence,
shares are also described as ownership securities. ^r H$hm OmVm h¡&
(a) Equity Shares (a) BpŠdQ>r eo`g©
The amount raised by the issue of equity BpŠdQ>r eo`g© Ûmam àmßV H$s JB© YZam{e, BpŠdQ>r
shares is known as equity share capital. It is eo`a H¡${nQ>c H$hcmVr h¡Ÿ& `h H§$nZr Ho$ {cE XrK©H$mcrZ
the most important source of raising long term H¡${nQ>c H$m g~go _hÎdnyU©© òmoV h¡Ÿ& BpŠdQ>r H¡${nQ>c,