Question

Discuss the three ways of capital transfer in the economy with diagram, Write three examples each from Pakistan with a diagram

Answer 1

The three ways to transfer capital in the economy are;

1) Equity Capital- There are some business that are entitled completely with equity capital which is cash invested by the shareholders or owners into the company that has no offsetting liabilities. Although it is the favoured form of capital for most businesses because they don't have to pay it back, it can be extraordinarily expensive.

2) Debt Capital- This type of capital is infused into a business with the understanding that it must be paid back at a predetermined date. In the meantime, the owner of the capital agree to except interest in exchange for using their money.

3)Speciality Capital- This the gold standard and something you would do well to find. there are a few sources of capital that have almost no economic cost and can take the limits off growth. This include things such as a negative cash conversion cycle.