Sources Of Finance : The Statement Of Financial Position

998 WordsMay 4, 20164 Pages
Identified sources of finance in the statement of financial position Debenture A debenture is the most common form of long term loan that can be taken by Humbro. Debentures are usually loans that are repayable on a fixed date this is in the statement of financial position under the heading Non-current liabilities (8,000) in both 2011 and 2012. Most debentures pay a fixed rate of interest which you can also see in the statement of financial position under current liabilities titled debenture interest (800) for year 2011 and 2012. The main advantage of a debenture to companies is the fact that they have a lower interest rate than overdrafts. They are usually repayable at a date far off in the future. Retained earnings Retained earnings are profits generated by a company that are not distributed to shareholders as dividends but are either reinvested into the business or kept as a reserve for specific objectives these being to pay off debt or purchase a capital asset. As you can see in Humbros statement of financial position under capital and reserves they have retained earnings at 9,100 in 2011 and 10,500 in year 2012 this has shown an increase which means there is more capital available for growth and higher returns on investments and shareholder equity. Ordinary shares Ordinary share are any shares that are not preference shares and do not have any predetermined dividend amounts. An ordinary share represents equity ownership in a company and entitles the owner to a
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