Tag: sources of business finance - 2

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.