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Course Code: COM-405 Course Title: Credit Hours: 3 (3-0) : Introduction To Business Finance

This document outlines the course details for an Introduction to Business Finance course, including the course code, title, credit hours, instructor information, topics to be covered such as working capital, financial statements, and types of shares, and definitions and characteristics of different types of shares such as equity shares, preference shares, and deferred shares.

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Sajjad Ahmad
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38 views20 pages

Course Code: COM-405 Course Title: Credit Hours: 3 (3-0) : Introduction To Business Finance

This document outlines the course details for an Introduction to Business Finance course, including the course code, title, credit hours, instructor information, topics to be covered such as working capital, financial statements, and types of shares, and definitions and characteristics of different types of shares such as equity shares, preference shares, and deferred shares.

Uploaded by

Sajjad Ahmad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Course Code : COM-405

Course Title : INTRODUCTION TO BUSINESS FINANCE


Credit Hours : 3(3-0)
 Teacher Name : Moeez Ul Haq
 Class : Lecture Room (Thu)
 Class Time : 08:00 Am To 10:30 Am
 Email address : [email protected]
 Link for Notes :
https://drive.google.com/drive/folders/1yt22B8epsWPJI
xWPvT4CzIghCJWuprIz?usp=sharing
Business Finance & Types
Working Capital
Agency Problem
Financial Statements
Cash Flow Statement
Bond and it’s Types
Ratio Analysis
The Time Value of Money
Share and its types
Share

 “A share is a portion in the capital of a company.”

A share is a percentage of ownership in a company


or a financial asset.
Kinds Of Shares

The different kinds of shares which can be issued by


Companies are:

 EQUITY SHARES
 PREFERENCE SHARES
 DEFERRED SHARES
Equity Shares
The equity shares or ordinary shares are those
shares on which the dividend is paid after the
dividend on fixed rate has been paid on preference
shares.
Equity Shares
Characteristics:
 No fixed rate of dividend.
 Dividend is paid after dividend at a fixed rate is paid on
preference shares.
 At the time of liquidation, capital on equity is paid after
preference shares have been paid back in full.
 Non redeemable.
 Equity shareholders have voting rights & thus, control
the working of the Company.
 Equityshareholders are the real owners of the
Company.
Preference shares
Preference shares are those shares which carry with
them preferential rights for their holders, i.e,
preferential right as to fixed rate of dividend & as to
repayment of capital at the time of winding up of
the Company.
Preference shares
Characteristics :
 Fixed rate of dividend.
 Priority as to payment of dividend.
 Preference as to repayment of capital during
liquidation of the Company.
 Generally preference shareholders do not have
voting rights.
Kinds of Preference Shares
On the basis of cumulating of dividend:

 Cumulative Preference Shares:


They are those shares on which the dividend at a
fixed rate goes on cumulating till it is all paid.

 Non Cumulative Preference Shares:


These are those shares on which the dividend does
not cumulate.
Kinds of Preference Shares
On the basis of participation:
 Participating Preference shares:
This type of shares are allowed to participate in
surplus profits of the company & surplus assets
during winding up.

 Non Participating Shares:


These shares are not entitled to participate in
surplus profit. Dividend at fixed rate is given.
Kinds of Preference Shares
On the basis of conversion:

 Convertible preference shares:


The owners of these shares have the option to
convert their preference shares into equity shares as
per the terms of issue.
 Non-convertible preference shares:
The owners of these shares do not have any right of
converting their shares into equity shares.
Deferred Shares :
A deferred share is a share that does not have any
rights to the assets of the company undergoing
bankruptcy until all common and preferred
shareholders are paid. These shares are held by
Founders or beginner of the company..
Deferred Shares :
Characteristics:
 Rate of dividend is not fixed. It depends upon the
availability of profits.
 Dividend is paid after payment of dividend on
equity & preference shares.
 At the time of liquidation, capital on these shares
is returned after capital is repaid on both
preference & equity shares.
SHARE CAPITAL
 Nominal, Authorized or Registered Capital:
 Issued Capital
 Subscribed Capital
 Called-up Capital
 Paid-up Capital
Nominal, Authorized or Registered
Capital:
The sum mentioned in the capital clause of
Memorandum of Association. It is the maximum
amount which the company raise by issuing the
shares and on which the registration fee is paid. This
limit is cannot be exceeded unless the Memorandum
of Association is altered.
Issued capital

The authorized capital which has been offered for


subscription to members and includes shares alloted
to members for consideration in kind also.
Subscribed Capital

The issued capital at nominal or face value which


has been subscribed or taken up by purchaser of
shares in the company and which has been alloted.
Called-up Capital

The total amount of called up capital on the shares


issued and subscribed by the shareholders on capital
account.
I.e if the face value of a share is Rs. 10/- but the
company requires only Rs. 2/- at present, it may call
only Rs. 2/- now and the balance Rs.8/- at a later
date. Rs. 2/- is the called up share capital and Rs. 8/-
is the uncalled share capital.
Paid-up Capital

The total amount of called up share capital which is


actually paid to the company by the members.
Question Answer session

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