Sources of Finance

Sources of Finance

1. EXECUTIVE SUMMARY:

In this course work, the different sources of finance used by various business ownerships, and the advantages and disadvantages of each are explored and illustrated. A critical analysis on the sources of finance is also carried out and the significance of these financial sources is also discussed in detail.

“Wealth may be an excellent thing, for it means power, and it means leisure, it means liberty.” -James Russell Lowell (1857)

As per the quote, securing money through different sources of finances will draws immense power and liberty to an organisation.

“Money is plentiful for those who understand the simple laws which govern its acquisition.” -George Clason (1926)

Iterating the statement made by George Clason, and interpreting it in terms of business, one who understands the tactics that governing the flow of money can have plenty of cash inflow. In other words, better the understanding on the sources of finances better will be the possibilities of utilizing them and attaining enough finance.

Thus, let us explore the cash inflow resources of business.

2. OVERVIEW OF SOURCES OF FINANCE:

Thinking about the sources of finance, there are a number of things we need to consider. First of all, we need to judge the necessity of business to raise finance. Finance can be required for a variety of reasons, which in turn effect the decision on what the most appropriate sources of finance.

Need of finance in a business structure:

• Starting up a new commerce.

• Managing the cash flow problem.

• Buying some new equipment.

• Buying another business (a takeover or acquisition).

• Dealing with debts and so forth.

3. CATEGORISATION OF FINANCIAL SOURCES:

Short Term Finance: This infers to the funds that is required to finance activities that will be lasting for less than a year. Usually, these types of finances are used to cope up with the day to day activities of an organisation.

Long...