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Understand the sources of finance available to a business - Assignment Example
Author : una83
Finance & Accounting
Pages 5 (1255 words)
Sources of finance should be different on different requirement of finance. For purchasing assets like building or machineries personal finance would be best because, these assets provide intangible return that might not be estimated. …
Understand the sources of finance available to a business
This paper will qualitatively address different sub-areas of this topic like assessing various source of finance; control, bankruptcy and legal implications of those sources; in-depth analysis of financial implications and tax effects; selection of appropriate source of finance for various projects. This paper mainly consists of qualitative discussion on these four areas. Identifying different sources of finance available to a business Finance is very much essential for a new as well as an existing business. Efficient financing is also essential in all stages of a business. Finance is required for business development, business operation and business expansion. Finance is core limiting factor to any business and hence, it is crucial a business to manage its financial resources strategically and efficiently. There are various sources of finance available to a business at different benefit and cost. Therefore, it is important for a company to choose most suitable source of finance based on its requirement and potential to optimally utilize the resources to generate adequate return.
Financing for short term projects should be done from medium term financing like bank loan, issuing of preference shares, debentures etc. Long term projects or business acquisitions can be done from issuing ordinary shares. Debt financing should be neglected for long term investments. ...