LIMITED COMPANIES

CONTENT

1. Sources of Capital for a Limited Liability Company
2. Advantages and Disadvantages of Limited Companies

Sources of Capital for a Limited Liability Company

The following are sources of capital open to limited liability companies:

(i) Loans and Overdraft: These can be obtained from the bank by the company to finance their operations

(ii) Retained earnings or plough back profit: The profit made by the company can be set aside for re-investment.

(iii) Credit purchase: Raw material can be purchased by the company on credit.

(iv) Hire purchase: Companies can be granted hire purchase facility by the seller to acquire some of their assets.

(v) Equipment leasing: Companies can lease some of their equipment from a given leaser and make payment through rental payment through rental payment.

(vi) Sales of shares – Public limited liability companies can raise capital by issuing shares to the public through the stock exchange

(vii) Sale of debenture: These are long-term loans obtained form the general public at a fixed interest

(viii) Bill of Exchange: This is a document duly signed by debtors bank to the creditors and the creditor cashes the money with some documents.