Non-Institutional Sources of Finance: Public Deposits and Lease Finance

Lessor gets fixed amount of lease rental every year and they cannot increase this even if the cost of asset goes up- this is a true statement.While making the leasing decision, the cost of leasing an asset must be compared with the cost of owning the same.

The lessee never becomes the owner of the asset. A person who holds an property is known as lessee.Lease rentals paid by the lessee are deductible for computing taxable profits- this is a true statement.

Matching the definitions: (a) Finance lease involves transferring risks/rewards, (b) Operating lease involves maintenance by the lessor, (c) Sale and leaseback is a specific type, (d) Direct lease is the standard acquisition.

The demand for leasing is steadily increasing as economic growth can be maintained even during the period of depression- this is a true statement. For using an asset, a contract
has to be made between the leaser and the leasee, which is known as a
lease.

The lessee never becomes the owner of the asset. A person who holds an property is known as lessee.

Lease financing provides finance diluting the ownership or control of business.-this is a false statement as lease financing does not provide finance diluting the ownership of the business.Lease rentals paid by the lessee are deductible for computing taxable profits.

The normal business operations may be affected in case the lease is not renewed- this is a true statement. For using an asset, a contract has to be made between the leaser and the leasee, which is known as a lease.

Lease financing in other words is renting of an asset for some specific period. The lessee pays a fixed periodic amount called lease rental to the lessor for the use of the asset. This enables the lessee to acquire  the assets with a lower investment.

While making the leasing decision, the cost of leasing an asset must be compared with the cost of owning the same.Lease financing does not provide finance diluting the ownership of the business.Lease rentals paid by the lessee are deductible for computing taxable profits.

In a lease agreement, the owner of the assets is 'lessor' and the party that uses the asset is known as 'lessee'. The lessee pays a fixed periodic amount known as the lease rent to the lessor for the use of the assets.

Lease financing in other words is renting of an asset for some specific period. The lessee pays a fixed periodic amount called lease rental to the lessor for the use of the asset. Therefore simple documentation makes it easier to finance assets and is a merit of lease financing.

In a lease agreement, the owner of the assets is 'lessor' and the party that uses the asset is known as 'lessee'. The lessee pays a fixed periodic amount known as the lease rent to the lessor for the use of the assets. The lessee never becomes the owner of the assets, it is deprived from the residual value of the asset.

Lease financing is a contractual agreement where by  the owner of the assets is 'lessor' that provides the grant to  the party to use the assets, who is known as 'lessee'. The lessee pays a fixed periodic amount known as the lease rent to the lessor for the use of the assets.

Few merits of lease financing are: It enables the lessee to acquire the assets with low investment, the risk of obsolescence is borne by the lessor, the lease agreement does not affect the debt raising capacity of an enterprise.

Public deposits obtained by a company means the deposits received by the company from public at large. Public deposits are unsecured, long term debt instrument. They have a slightly higher rate of interest when compared to that of interest rates of banks. They are usually issued to meet the working capital needs of the company.

(i) A company collects the required amount of capital through different sources.
(ii) The small part of the capital is raised through borrowing
(iii) The greater part of the capital is raised by the company through the issue of shares.
(iv) The short term capital is raised by the  company accepting deposits from the general public.
(v) The deposit accepted  by the company
from the  general public are called public deposit.
(vi) A company accepts deposit for a minimum period of 6 months and for a maximum period of 3 years.
(vii) Because of the above reason, the amount of deposit is a short term source of capital.

 Public deposits refers to the unsecured securities which is invited from the public. It is mainly used to finance the working capital of the company. Limitations of public deposit are:a) New companies generally find it difficult to raise funds through public b) It is an unreliable source of finance.deposits.c) Collection of public deposits may prove difficult when the size of deposits required is large.

Public deposits refer to the unsecured deposits invited by companies from the public mainly to finance working capital needs- this is a true statement.  Public deposits do not usually create any charge on the assets of the company.

Renewal facility enables companies to use public deposits as medium-term finance- this is a true statement.Public deposits refers to the unsecured
securities which is invited from the public. It is mainly used to
finance the working capital of the company.

Public deposits refers to the unsecured
securities which is invited from the public. It is mainly used to
finance the working capital of the company. Public deposits of a company cannot exceed 25 per cent of its share capital and free reserves.

A document issued to public for collection of capital is prospectus- this is a true statement.The invitation to public for capital
subscriptions is through prospectust. Prospectus
provide details about the offer of sale to the public. It is issued by
SEBI.

The invitation to public for capital subscriptions is through prospectus- this a true statement. Prospectus provide details about the offer of sale to the public. It is issued by SEBI.

The deposits that are raised by organisations directly from the public are known as public deposits. Cost of public deposits is generally lower than the cost of borrowings from banks and financial institutions. Public deposits are beneficial to both depositor as well as the organization. 

The deposits that are raised directly from the public are public deposits. Any person who is interested in depositing money in an organisation can do so by filling up a prescribed form. the cost of deposits to the company is less than the cost of borrowings from banks. But Collection of public deposits may prove difficult, particularly when the size of deposits required is large.

Public investment in a company is generally in the form of shares, debentures and deposits. It means public can invest in a company by purchasing shares, debentures and deposits.