In simple terms, debt is the sum acquired from the outside or external sources along with the liability of some specific amount of interest at the time of repayment of borrowed funds and the equity is the owner’s capital; however, both debt and equity funds are raised to increase the share capital of the company. Debts are the credits for the company and hence return on … [Read more...] about Debt Vs Equity
Finance
Bonus Shares
Definition: Bonus Shares are the supplementary or extra shares distributed to the current stakeholders of the company without taking any extra amount from them, and these shares are issued out of free reserves created from the profits earned by the company. They do not make any impact on the stakeholder’s equity as they are allotted to relocate the retained earnings to the … [Read more...] about Bonus Shares
Municipal Bond
Definition: Municipal Bond are the bonds which are issued by the local government or agencies to complete their minor projects or to complete the public welfare work for which finance is required, a government issues a certificate consisting of its worth and also provides interest on such certificates to the holders of Municipal Bonds. A general example for which the local … [Read more...] about Municipal Bond
Money Market
Definition: Money Market acts as an essential part of economic development. It is concerned with that portion of the financial system where trading of the short-term fund is done for a period of less than 1 year. It is a product of the capital market, which is treated as a channel of short-term debt capital. Although it is undoubtedly distant from the capital market, money … [Read more...] about Money Market
Shares
Definition: Shares are the smallest unit of the company's capital or can be said as a unit of equity. The holder of such shares in a company is known as "Shareholders" (the owners of the company). These shares can be issued to the public for raising the funds of the company for its expansion. The market used for trading of shares is known as “Share Market” which deals in … [Read more...] about Shares
Lease
Definition: A lease is a legal agreement amongst two parties known as lessor (owner) and a lessee (occupant). Lessor grants a temporary possession to the lessee to use his/her property or asset such as land and building against some monetary compensation for a certain period as mentioned in an agreement of lease. Lease facility is generally used by the entities who want an … [Read more...] about Lease
Debentures
Definition: Debentures are the certificate or the creditorship securities issued by the company to the public when there is a need of capital for expansion and development, but the company don’t want to uplift their share capital. They are the liability of the company which has to be repaid in a specific time period; however, a feasible alternative of term loans for … [Read more...] about Debentures
Net Present Value (NPV)
Definition: The Net Present Value (NPV) is a means of evaluating the actual long-term profitability of an investment or a project through the initial outflow, future cash flows and time value of money. Also known as the discounted cash flow method, it backs the capital budgeting decisions of a company. It is an effective means of forecasting the future outcome of a … [Read more...] about Net Present Value (NPV)
Tax Holiday
Definition: Tax holiday refers to the temporary period when the government reduces or provides complete relaxation on tax payable on a specific range of products, income or property. It generally lasts for a day, or two days or a week. Some of the most prominent kinds of taxes included under this holiday initiative are sales tax, property tax, income tax and GST (Goods and … [Read more...] about Tax Holiday
Decision Tree Analysis
Definition: Decision tree analysis is a powerful decision-making tool which initiates a structured nonparametric approach for problem-solving. It facilitates the evaluation and comparison of the various options and their results, as shown in a decision tree. It helps to choose the most competitive alternative. It is a widely used technique for taking crucial decisions like … [Read more...] about Decision Tree Analysis