ACCA P3考试：Financing Source Selection
Organisations need to understand and evaluate the characteristics of the various sources of finance available in order to employ the source most suited for its strategic development. Financing sources are examined based on the following criteria:
cost; duration; gearing; size of the company; and term structure of interest rates.
Type of CapitalSecurity or Voting RightsIncomeAmount of Capital
Ordinary shares (also called equity shares)Usually have voting rights in general meetings of the company. Rank after all creditors and preference shares in liquidation.Dividends payable at the discretion of the directors (subject to sanction by shareholders) out of undistributed profits remaining after senior claims have been met. Amounts available for dividends but not paid out are retained in the company on behalf of the ordinary shareholders.The right to all surplus funds after prior claims have been met.
Cumulative preference sharesRight to vote at a general meeting only when dividend is in arrears or when it is proposed to change the legal rights of the shares. Rank after all creditors but usually before ordinary shareholders in liquidation.
A fixed amount per year at the discretion of the directors subject to sanction of shareholders and in accordance with rules regarding dividend payments; arrears accumulate and must be paid before dividend on ordinary shares can be paid. Note that unlike other forms of debt, the interest paid on preference shares is not corporation tax deductible.A fixed amount per share.
Non-cumulative preference sharesLikely to have some voting rights at all times rather than in specified circumstances as in the case of cumulative. Rank as cumulative in liquidation.A fixed amount per year, as above; arrears do not accumulate.A fixed amount per share.
Secured Debentures and loan stockThe charge is on one or more specific assets, usually land and buildings (which are mortgaged) or a floating charge over all assets. On default, the assets are sold; any surplus adds to the assets of the company available for the satisfaction of creditors; if there is a deficit, the company is liable for the unsatisfied balance. No voting rights.A fixed annual amount, usually expressed as a percentage of nominal value.A fixed amount per unit of loan stock or debenture.
Unsecured debentures and loan stockNone; holders have the same rights as ordinary creditors. No voting rights.A fixed annual amount, usually expressed as a percentage of nominal value.A fixed amount per unit of loan stock or debenture.