Dev Ltd is a company engaged in the production and distribution of films. The
company is an established name in Bollywood. Now the company wants to enter in
the regional cinemas also and for this, they are now targeting the South Indian Film
Industry.
They have launched three films in South with leading actors and actresses and even
managed to sing Rajnikanth. To fund its projects, the management takes a decision
to raise money for long term capital needs to business from certain sources.
(i) State the different sources of long-term capital.
(ii) Decision to raise money for long-term capital needs is affected by several factors.
Discuss any five such factor
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Sources and Factors affecting Long-term Capital are as follows
Explanation:
i. Different sources of long-term capital are:
- Equity Shares
- Preference Shares
- Retained Earnings
- Long-term advances and loans
- Debentures
ii. Factors affecting Financing Decisions :
Cost: the cost of raising funds through different sources is different.
Risk: the risk associated with different sources is different
Floatation Cost: higher the floatation cost, less attractive the sources are.
State of Capital Markets: health of the capital markets may also affect the choice of fund's source.
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