CAPITAL

1
CAPITAL

• Defination
• Methods of Obtaining Capital
• Equtiy financing and debti fincancing
• financial statements
• The calculation and use of financial ratios
• Profits and losses of a business
• Rate of stock turnover
• factors affecting stock turnover

2
Defination

• capital
• long-term capital
• short-term capital

3
Capital is one of the four factors of production.
Without it no business can survive.
CAPITAL
Long-term capital
Short-term capital
4
Methods of obtaining capital

• Eqyity financing methos
• self-financing
• additional partners
• issuing shares
• Debt financing methods
• borrowing from friends and relatives
• trade credit
• overdrafts and bank loans
• factoring accounts receivables
• issuing debentures

5
Financial Statements

• Balance sheet
• profit and loss account

6
The Calculation and use of financial ratios

• Liquidity
• Profitability

7
Liquidity

• Current ratio
• current assets
• current liabilities
• Acid-test ratio
• current assets - stock
• current liabilities
• Working capital
• current assets - current liabilities

8
Profitability

• Gross profit percentage
• sale -cost of goods sold x 100
• sales
• Net profit percentage
• net profit x 100
• sales
• Rate of return on capital
• net profit x 100
• owners capital