Written Report For Sources of Finance
Written Report For Sources of Finance
Written Report For Sources of Finance
CBET 22-303A
WRITTEN REPORT
INTRODUCTION
Finance is the lifeblood of business concern, because it is interlinked with all activities
performed by the business concern. In a human body, if blood circulation is not proper,
body function will stop. Similarly, if the finance not being properly arranged, the business
system will stop. Arrangement of the required finance to each department of business
concern is highly a complex one and it needs careful decision.
2 PARTS OF FINANCE
SOURCES OF FINANCE
Sources of finance mean the ways for mobilizing various terms of finance to the
industrial concern. Sources of finance state that, how the companies are
mobilizing finance for their requirements.
Sources of finance may be classified under various categories
according to the following important heads:
1. Based on the Period
Long-term sources - When the finance mobilized with
large amount and the repayable over the period will
be more than five years, it may be considered as long-term
sources.
Long-term sources of finance include:
o Equity Shares
o Preference Shares
o Debenture
o Long-term Loans
o Fixed Deposits
Short-term sources - Apart from the long-term source of finance, firms can
generate finance with the help of short-term sources like loans and
advances from commercial banks, moneylenders, etc. Short-term source of
finance needs to meet the operational expenditure of the business
concern.
Short-term source of finance include:
o Bank Credit
o Customer Advances
o Trade Credit
o Factoring
o Public Deposits
o Money Market Instruments
2. Based on Ownership
Sources of Finance may be classified under various categories based on
the period:
An ownership source of finance include:
Shares capital, earnings
Retained earnings
Surplus and Profits