Public Limited Corporation And Private Limited Company

1113 WordsMay 21, 20175 Pages
Public limited company and private limited company. _ Difference Company is defined as a legal entity which is allowed by legislation and permits a group of people to run a business. Finance is the basic ingredients of a business. Without cash a business can not run.various sources of finance helps a business to grow and to fulfill it’s need of wages, advertising, expansion, payment of interest etc. Different sources of finance are used depending upon their maturity period. To built a company not only finance but also various factors which are the essentials of it. INTRODUCTION Private limited company is a legal and juristic person established under companies Act. Private limited company is of two types ,which are by shares and by…show more content…
Long term finance 2. Medium term finance 3. Short term finance 1. Long term finance :- Long term sources of finance are those method that are adopted to private finance for a long period of time. The period of time must be of one year and above. Example of long term fianancing include a 40 year mortgage or a 10 year treasury note. The sources of long term finance are : ● Debentures ● Common stock ● Preference shares ● Mortgage ● Government grants/loans 2. Medium term finance :- Medium term finance or intermediate financing is done for a period intermediate between 1 to 10 years . Medium term financing is generally done for the purpose of maintenance or up gradation of the business. The sources of medium term finance are : ● Loans ● Venture capital trust ● Lease ● Hire purchase 3. Short term finance :- The money needs for less than a year are fulfilled through short term financing. They provide a cash influx or the fulfillment of short term inventory needs and repairs as well as short term investments. ● Bank over drafts ● Trade credit ● Factoring ● Invoice discounting On the other hand, ● Private limited company: If few person by together starting a new business or trying to grow an existing business or company , all certainly will need money . This money can come from various sources. Roughly speaking
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