Chapter 3
Defined as the provision of money at the time when it is required.
Finance
Are outside of the firm they are used extensively for collecting initial capital.
External Sources
Are available within the firm. They develop after few years of profitable working of the firm.
Internal Sources
A business firm requires long term finance for meeting fixed capital needs.
Long Term Source
Ate required for meeting qorking capital requirement. These funds are required for a short period.
Short Term Source
Unit of ownership of a company and is offered for sale so as to raise capital for the company
Shares
Also known "Ordinary Shares" for legal reason.
Equity Shares
These shares have certain privileges and preferential rights distinct from those attaching to equity shares.
Preference Shares
Are earnings of the company which are retained in the business.
Retained Profits
The process of accumulating corporate profits and their utilization in business
Retained Earning
Represent borrowed capital.
Debentures
Are creditors of the company. It gets a fixed rate of interest as return on his investments.
Debenture Holders
Has the power of o issue debentures
Board of Directors
Is a debt security.
Bonds
Is a creditor of the company
Bondholder
Is an important source of financing short term requirement of company
Public Deposits
Is a sum of money that one or more individuals or companies borrow from bansk or other financial institutions.
Loan
No business can be run without "Credit". It is considered as soul of business
Trade Credit
Manufactures, wholesalers, and supplierd of goods or material
Trade Creditors
Is extended by these business concersn with an intention to increase their sales.
Credit
A company remits an unexpired commercial bill of exchange to the bank in return for an advance of the amount of the bill less interest and fees.
Financing Transaction