Sources of Funds

Sources of Funds

  • Submitted By: prabhas4
  • Date Submitted: 12/09/2009 4:29 AM
  • Category: Business
  • Words: 1707
  • Page: 7
  • Views: 1

Long-term sources of finance: Long-term financing can be raised from the following sources:
 Share capital or equity share
 Preference shares
 Retained earnings
 Debentures/Bonds of different types
 Loans from financial institutions
 Loan from state financial corporation
 Loans from commercial banks
 Venture capital funding
 Asset securitisation
Medium-term sources of finance: Medium-term financing can be raised from the following sources:
 Preference shares
 Debentures/bonds
 Public deposits/fixed deposits for duration of three years
 Commercial banks
 Financial institutions
 State financial corporations
 Lease financing / hire purchase financing
 External commercial borrowings
 Euro-issues
 Foreign currency bonds
Short term sources of finance: Short-term financing can be raised from the following sources:
 Trade credit
 Commercial banks
 Fixed deposits for a period of 1 year or less
 Advances received from customers
limited liability of the shareholders
can raise capital from a large number of investor through issuing shares or bonds
its existence is not limited by the withdrawal of its owners
central control over the operations by the board of directors
not bound by the contract of one of the owners
owners may not control the organization even if they don't like managements' decisions
both the organization and the owners are taxed
 Preference shares
preference share A share in a company yielding a fixed rate of interest rather than a variable dividend. A preference share is an intermediate form of security between an ordinary share and a debenture. Preference shares usually confer some degree of ownership of the company. However, in the event of liquidation, they are paid off after loan capital but before ordinary share capital.

Participating preference shares carry additional rights to dividends, such as a further share in the...

Similar Essays