SOURCES OF FINANCE - CAPTIAL FIXED AND WORKING Flashcards
What does business finance mean?
Business finance refers to the money and credit employed in a business firm.
Why is business finance important for meeting liabilities?
It helps a business pay its liabilities on time.
How does business finance help take advantage of business opportunities?
It provides the necessary funds to seize business opportunities when they arise.
Why is business finance important during a recession or tough times?
It ensures the business can continue to pay employees and cover expenses during difficult times.
How does business finance contribute to the smooth running of a business?
It provides the funds necessary for the business to operate effectively.
What are the three main types of business firms?
Sole proprietorship, partnership firm, and joint stock company.
How does a sole proprietorship typically obtain funds?
The owner uses personal funds, takes loans from friends/relatives, or borrows from commercial banks.
What are common sources of finance for a partnership firm?
Retained profits, loans from commercial banks, or loans from financial institutions.
What are the sources of finance for a joint stock company?
Issuing shares, using retained profits, taking loans from commercial banks/financial institutions, and issuing debentures.
What is financial planning?
It is the process of estimating financial needs, choosing the sources of funds, and deciding how funds will be utilized in a company.
What are the key concepts of financial planning?
Estimating, choosing, and deciding how to use funds.
What is the scope of financial planning?
Financial planning has a wide scope and covers various aspects of a company’s finances.
Why is financial planning considered future-oriented?
It involves planning for the future financial needs of the company.
What does financial planning involve?
Deciding when, how, and why financial activities will take place.
Why is forecasting important in financial planning?
It helps anticipate future financial requirements and potential challenges.
