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FINANCIAL MANAGEMENT TOPIC- SOURCES OF FINANCE

This article discusses the various sources of finance for businesses, including long-term funds such as share issuance and debentures, medium-term funds like bank loans and preference shares, and short-term funds like bank credit and trade credit.

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FINANCIAL MANAGEMENT TOPIC- SOURCES OF FINANCE

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  1. FINANCIAL MANAGEMENTTOPIC- SOURCES OF FINANCE M.C. Bakali, Department Of Commerce, H G C

  2. UNIT-II • SOURCES OF FINANCE: Every enterprise, whether big, medium or small, needs finance to carry on its operations and to achieve its targets. In fact finance is so indispensible today that it is rightly said that finance is the life blood of business enterprise. Capital required for a business can be classified under two main categories. • Fixed Capital • Working Capital

  3. Long-term funds are required to create production facilities through purchase of fixed assets such as plant, Machinery, land, building, furniture etc. Investment in these assets represent that part of firm’s capital which is blocked on a permanent basis and is called fixed capital. Funds are also needed for short –term purposes for the purchase of raw materials, payment of wages and other day-to-day expenses .These funds are known as working capital.

  4. The various sources of raising funds have been classified on the basis of period as follows: • Long-term funds: • Issue of share • Issue of Debentures • Ploughing back of profit • Loans From Specialised Institutions • Medium Term funds: • Issue of pref. Shares • Bank loans • Public deposit

  5. Short term funds: • Bank credit • Customers Advances • Trade credit • Factoring • Loans from specialized financial institutions • Deferred incomes • Commercial papers • Accruals • Deferred Income • Instalment Credit

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