Question

ABC limited is not having good liquidity position. It has invested in long term investment

projects and will get smooth cash flow after five years. It is not in a position to bear risk of fixed

burden of paying interest.

a) Suggest a source of owners fund suitable in above case.

b) State any five advantages of
source.​

Answer 1

Explanation:

a) issue of shares

b) Advantages:

1) no fixed operating cost as we need not to pay any interest

2) large capital can be arranged

3) no need to pay any dividend

4) easy to arrange capital