Tamilnadu Samacheer Kalvi 11th Commerce Notes Chapter 19 Sources of Business Finance Notes
→ “Finance is the lifeblood of.any business.’” ‘
→ The term business finance denotes the economic resources employed in business enterprises.
→ “The finance function is the process of acquiring and utilizing funds by a business.”- R.C. Osborn
→ “Finance is that business activity which is concerned with the acquisition and conservation of capital fund in meeting the financial needs and overall objectives of business enterprises.”- B.O. Wheeler
→ Business finance is classified into three types with reference to time period.
→ Commercial paper (CP) is an unsecured money market instrument in the form of a promissory note.
→ Small scale firms can acquire industrial machinery, office equipments, vehicles, etc., without making full payment through hire purchase.
→ Factoring is a one of the methods of raising business finance through sale or mortgage of book debts,
→ When the bank lends for a period ranging from more than one year to less than five years, it is called medium term loan. ‘
→ Commercial banks are important sources of raising business finance for various purposes as well as for different time periods.
→ Owner’s funds mean funds which are provided by the owner of the enterprises who may be an individual, or partners or shareholders of a company.
→ The term ‘borrowed funds’ denotes the funds raised through loans or borrowings. .
→ Micro finance or financing small business enterprises today has to be viewed from the ‘ethical’ sources than the ‘informal’ sources that are totally unscrupulous in their financing practices.
→ Business enterprises have to analyse the cost of mobilising and utilizing the funds.
→ Financially sound enterprises have capacity to pay interest promptly and return the capital at the stipulated time.
→ Some investments can be easily and readily encashed in the market without any loss. Such investments are called liquid investments.
→ Real estate is one of the fastest growing sectors in India.
→ Public deposits are more beneficial than the fixed deposit in the bank, in the matter of yielding good return.
→ Bonds are one of the ideal investment options for those investors who would like to invest their hard earned money safely.
→ Recurring deposit (RD) account is another investment option for those people who earn regular income.