Day: March 6, 2022

Lease charges are usually prohibitive i.e. the cost of finance is excessive. It may not be known to businessmen. Uncertainty as to returns from such assets i.e. the returns from such assets leased may not encourage the growth of lease Read More …

Leasing is a contract between one party called lessor (owner of asset) and another called lessee where the lessee is given the right to use the asset (without legal ownership) and undertakes to pay the lessor periodic lease rental charges Read More …

1. The floatation costs are higher than those of debt 2. It is only accessible to companies that have fulfilled the capital markets authority requirements 3. It can lead to dilution of ownership of control of the firm by the Read More …

1. They facilitate projects especially long-term projects because they are permanent.. 2. Its cost is not a legal obligation. 3. It lowers gearing level – reduces chances of receivership/liquidation. 4. Used with flexibility – without preconditions. 5. Such finances boost Read More …

Shares are used as securities for loans (a compromise of the market price of a share). • Its value grows. • They are transferable at capital gain. • They influence the company’s decisions. • Carry variable returns – is good Read More …

This is a common type of debt and is available in different terms usually short term. Medium term loans vary from 2 – 5 years. Long-term loans vary from 6 years and above The terms are relative and depend on Read More …

Sources of finance can be divided into two Short term sources They are refundable after a long period of time i.e. after 3 years They include commercial paper, bank overdraft, loans, promissory notes, treasury bills, bills of exchange letters of Read More …

It is a new discipline of management which evolved in the last quarter of the 20th century. Though relatively new in the management circle, the issue of corporate governance is one of the leading issues in leadership and management. Corporate Read More …

An agency relationship is created when one party (principal) appoints another party (agent) to act on their (principals) behalf. The principal delegates decision making authority to the agent. In a firm agency relationship exists between; 1 Shareholders and management 2 Read More …

1. Profit maximization – This is a traditional and a cardinal objective of a business. This is so for the following reasons: • To earn acceptable returns to its owners. (i.e. Must not be less than bank rates + inflation Read More …