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Every time the company wants to expand or grow, more finances are required and problem is there in respect to the suitable sources of finance. 1.trading on equality: when debt and preference shares are used as main sources of finance then it is called trading on equality. under this case, an enterprise earns a higher rate of return on capital employed than the rate of interest payable on borrowed funds. 2.Control of business: majority of equity shares capital is held by promoters or their relatives and a large proportion of and is raised by the issue of debentures and preference shareholders usually do not have any voting right as enjoyed by the equity shareholders. 3.Nature of business: 4. size of business 5. period of finance. 6.cost of capital. 7. purpose of financing 8.choice of investors 9. need of investors 10. future cash inflows 11. stability of sales

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