The term own capital funds has meaning in the economy and within the range of the real estate financing.

Own capital funds in the economy

Own capital funds are the means put on in an enterprise, which belong to the owners (e.g. shareholders or partners). In addition count above all the deposited capital (company capital) - at a corporation speaks one of capital stock, at a GmbH of the capital stock -, legal, statutory and free reserves as well as a any profit brought forward.

At private firms and unincorporated firms (OHG, kg) in addition (in the balance not proven) the private possession of the owners and/or personally responsible partner is included.

Own capital funds can be procured from the outside - first during the original allocation of equipment with moneys or by capital increases, this is the most important part of the self financing later. Own and outside financing (this in particular by raising of credit) form together the external financing. From it the internal financing is to be differentiated, which can come from profits (=Selbstfinanzierung), resetting and adjustments of value, writings-off as well as capital setting free fortune layerings.

Own capital funds are generally a condition for outside financing, since without sufficient responsible own capital funds outside capital givers are not ready for the payment.

In the context of the option price theory own capital funds can be seen as Long call. In the case of insolvency of the enterprise owners of own capital funds receive to nothing until all requirements for repayment of the outside capital givers are fulfilled. Starting from the point, in which all outside capital funds can be erased, the own capital funds givers receive the full cash-flow of the enterprise, which can be seen at a 45"° curve. The formula for it reads:

EK_l = \ max (0 {,} (\ mathrm {cash-flow r \ ddot uckzahlungsanspruch}) \ cdot (1-Steuersatz)) 

Expected risk premium on the net yield of own capital funds

Differently than the outside capital giver owner of own capital funds does not receive firm payment return flows (interest). There is also no date of redemption. In the case of a future bankruptcy the outside capital givers are served as described above with priority. If no more liquidatable active ones exist after repayment of all debts, then the own capital funds owners go out empty. For these reasons a substantially larger risk than the outside capital giver carries the own capital funds giver. It will therefore provide its net yield expectation with a risk premium, which compensates it for this assumption of risks. The average dividend yields at the capital market are therefore in all rule higher than the average interest without risk on loans. Without risk premium will not be ready the shareholder i.d.R. the business risk to take over, which represents an investment in own capital funds.

Own capital funds in the real estate financing

Within the range of the real estate financing own capital funds those means are called, which are to the owner at the disposal, e.g. cash, savings balances, time deposits, securities, building savings balances, and existing property. In the broader sense to own resources the paid building materials and architectural works, relative loans, employer loans and public subsidies are counted. For instance with builder projects it is not uncommon the fact that specialized investment companies join particularly the object companies created for the realization of a project as Komanditist and in the form of endorsements or makes partner loan available own capital funds, so that a further financing with outside capital is only made possible. Since own capital funds a higher loss risk are subject it are also more highly paid interest on than a usual bankers' loan.

Own capital funds in record keeping/Rechungswesen

In the account system own capital funds are a and are with the operating ability to be equated. From the yearly difference the profit of an enterprise is computed. See balance.

Articles in category "Own capital funds"

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