On the other hand. Revenue expenditures are those of a recurring nature, required for short term business needs. These are “used up” in the course of running the business.Utilization of internally generated funds is possible in an ongoing situation of running a business. Such internal funds may be cash surpluses generated from operations or cash obtained upon the sale of non-essential assets. Obviously this is not relevant in the present case.Shares are documents certifying apportioned ownership of a company to the extent of “face value” declared in the issue document. Only Private Limited or Public Limited Companies can issue such shares, subject to the controls of regulatory agencies. Those individuals or entities holding shares have defined rights to exercise control in the company to the extent of the number of shares held by each. Rights include voting rights in Annual meetings, receiving “dividends” declared by the company to provide returns on the investment to the shareholders, etc. Debentures on the other hand are secured instruments issued by “Limited” companies with a commitment to redeem the value within a specified period and to pay interest to the investor during the specified period of operation. Shares and Debentures are normally issued when large investments are planned with a minimum investment from the “Promoters”. Issue expenses are high and it entails time-consuming formalities. In this case, the two individuals involved are able to meet a substantial portion of the investments and therefore this option is not suggested.Mortgaging is a means to avail of loans, pledging Real property as security. A legal document is created defining the terms of the mortgage. The agreement specifies the period of the mortgage and schedule of payments including interest and other legal aspects. When repayment in full is made as per the agreement the pledge is canceled (1).
Managing Financial Resources Bruce McIntyre