Options for investing surplus funds
Shares and debentures: – the company invests its surplus funds in the outside corporate securities. i.e. shares and debentures of other companies. The company gets dividend and interest from these idle investments.
Government bonds: – The company can invest its surplus funds in the various government bonds which will earn them some returns. These bonds not only beneficial to the government but also to the corporate business people.
Intercorporate deposits: – The company can also invest its surplus funds with another company via deposits these sorts of deposits are called imtercorporate deposits, the company earns interest on these investments.
Expansion: – the company can also utilize its surplus funds by employing it in it the same business for further expansion of the business. Expansion of these businesses leads directly or indirectly through their surplus.