7 SOURCE OF CAPITAL TO COMPANIES
Shares; The main source of capital for any company is the sale of shares. -A share is a unit of capital in a company e.g. if a company states that its capital is ksh.100,000 divided into equal shares of ksh.10 each. -Each shareholder is entitled to the company’s profit proportionate to the number of shares he/she holds in the company. Types of shares; Ordinary shares Preference shares Ordinary shares;- Ordinary shares have the following rights: Have voting rights Have no fixed rate of dividends. The dividends on them vary according to the amounts of profit made They have a claim to dividends after the preference shares If the company is being liquidated, they are paid last after the preference shares Preference shares;- They have the following characteristics; Have a fixed rate of sharing profits(dividends) Hav...