Difference Between Owned and Borrowed Funds

  • Owned funds or equity refer to the money contributed by owners of business and the profits reinvested in business. Such funds provide ‘risk capital’ and remain permanently invested in the business. Owners are entitled to exercise control month management of business. In a company, funds raised by the issue of shared and retained profits constitute owned funs.
  • Borrowed funds or debt mean the funds raised y way of loans and credit. Such funds are raised for specified periods at fixed rates of interest. Creditor who provide these funds do not have the right to exercise control on the management of business. Debentures. Loaned and public deposits are main sources for borrowed funds.

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