(e) Projects likely to meet growing demand for essential commodities. Merits and Demerits of Harmonic Mean. Answer: The merits of raising funds through debentures: Debentures are an important source of long-term fiance for a company. BTech Tuition BCom Tuition Engineering Diploma Tuition BBA Tuition BSc Tuition; Subject. It was registered as a public limited company, not as a statutory corporation. For the Indian students of Sociology, the study of the Indian family system deserves special attention, not only because they are born in Indian families but also for here the family system differs … (b) Loan capital: debentures. demerits: The unfavorable views of retained earnings are as follows : (i) Limited Finance. (iv) Positive Connotation. Meaning of retained earnings; Merits and limitations of Retained Earnings; If you would like to contribute notes or other learning material, please submit them using the button below. Image: Payback period method – Formula, Merits, Demerits, Suitability. Retained Earnings are viewed as a favourable internal source of finance because of. 4. Debentures do not carry voting rights, and therefore, debenture holders are not in position to exercise any control over the affairs of the company. Debentures are known as creditor securities. The company can not depend on them for long term financing requirements. 1 answer. (2) There is always danger of over capitalisation, if the company goes on retaining profit every year. 1. ii. It is international both in ownership and operation. These bodies provide long and medium term loans and grants promote to development economically backward areas in the world. 2020 Zigya Technology Labs Pvt. It is capable of further algebraic treatment. The prominent financial instruments used for this purpose are : (a)Global Depository Receipts (GDRs) : GDRs are issued to tap the global capital markets by way of global equity offerings. Need assistance? 4. Debentures – meaning; kinds of debentures; advantages and disadvantages of debentures. A shareholder enjoys all the rights of membership of a company such as right to vote, etc. Copyright © 2020 Applect Learning Systems Pvt. ADRs are bought and sold in American markets like regular stocks. Class 12 Tuition Class 11 Tuition Class 10 Tuition Class 9 Tuition Class 8 Tuition; Class 7 Tuition Class 6 Tuition Class 1 to 5 Tuition Nursery-KG Tuition; College. It gives to greater importance to small items. Notice I said cumulative. Loans from commercial banksand Financial Institutions - meaning, Understanding Payback Period method. 6. Contact us on below numbers. Merits of Retained Earnings: I companies point of view: 1. It was set up as a statutory corporation under Industrial Development Bank of India Act, 1964. This number is taken from the Income Statement after all expenses and taxes are deducted from the revenues. CBSE CBSE (Arts) Class 11. Share with your friends. Relying on retained earnings eliminates the fear of ownership dilution and loss of control by the existing shareholders. 3. 2. It gives us the total picture of the problem even with a single glance. This method is also known as pay out, pay off or recoupment period method. 2. Concept Notes & Videos 295. There are no expenses on prospectus, advertising etc.3. As an internal source, it is more dependable than external sources. 2. 2. 8. (d) locate and fill up gaps in the industrial structure of the country. (3) The management can misuse the funds available as undistributed profit. Random sampling is a method of choosing a sample of observations from a population to make assumptions about the population. It may issue them by investing in unprofitable or undesirable channels. As a result, the variability of profit after tax is substantially transmitted to retained earnings. Objects : The purpose of IFCI is “to make medium and long-term credits more readily available to industrial concerns in India, particularly incircumstances “Where normal banking accommodation is inappropriate or recourse to capital issue method is impractiable.” The corporation provides financial assistance for the setting up new ventures as well as the modernisation and expansion of existing enterprises. Merits or Uses: 1. Write a short note on (a) Retained earnings (b) Trade credit. (c)Foreign Currency Convertible Bonds (FCCB’s): Foreign currency convertible bonds are equity linked debt securities that are to be converted into equity or depository receipts after a specific period. Industrial Credit and Investment Corporation of India (ICICI) : The ICICI was set up on January 5, 1955 as a public limited company under the Company Act. Depository shares Video is highly rated by Commerce students and has been viewed 109.... 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