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Q3)​Sources of Finance State and briefly describe each type of Debt & Equity (Long Term &...

Q3)​Sources of Finance
State and briefly describe each type of Debt & Equity (Long Term & Short Term) Finance.
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Answer #1

Long term Debt

It refers to any debt that extend beyond a 12-month period, or beyond the current business year or operating cycle.

Short Term Debt

It refers to any debt is payable within 12-month period, or within the current business year or operating cycle.

Secured Debt

It is debt secured/backed by collateral/mortgage.

Unsecured Debt

It is debt other than secured debt.

Equity share capital

It represents the owners’ or shareholder’s investment in the business as a capital contribution.

Preferred Share Capital

The preferred stock is a type of share that often has no voting rights, but is guaranteed a cumulative dividend.

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