Owners current account to capital

[Jawad Ahmed]

What is the effect on the financials and ratios if an amount that is being represented in owners current account (owners receivable/company payable) is transferred to the share capital of the company. i know that the share capital will be increased which will effect the voting right of the shareholders, will reduce the eps (negative impact for the bank and the shareholders), the amount that is shifted can no longer be taken back and is treated as capital.

i want to understand what are the pro's and con's of the above scenario related to the ratios and the financials?

Regards,
Jawad Ahmed

 

[Triest123]

What is the effect on the financials and ratios if an amount that is being represented in owners current account (owners receivable/company payable) is transferred to the share capital of the company. i know that the share capital will be increased which will effect the voting right of the shareholders, will reduce the eps (negative impact for the bank and the shareholders), the amount that is shifted can no longer be taken back and is treated as capital.

i want to understand what are the pro's and con's of the above scenario related to the ratios and the financials?

Regards,
Jawad Ahmed

=> The advantages are
......(1) The liquidity of the company would be improved as the company do not need to
........... repay these short-term liabilities when they are due.

......(2) The company can have cash to operate its business without financing with
............the banks, hence saving the borrowing costs.