Explain Period basis and Ownership basis sources of finance
On the basis of period, sources of finance can be as follows.
1. Long term: Taken for a period greater than 5 years. Example- equity shares, debentures.
2. Medium term: Taken for a period greater than 1 year but less than 5 years. Example- loans from banks, public deposits.
3. Short term: Taken for a period less than 1 year. Example- trade credit, factoring
On the basis of ownership, sources of finance can be as follows.
1. Owner's fund: Funds invested by the owners of the company. Example- equity shares, retained earnings
2. Borrowed fund: Funds invested by the outsiders. Example- debentures, loans form banks
1. Long term: Taken for a period greater than 5 years. Example- equity shares, debentures.
2. Medium term: Taken for a period greater than 1 year but less than 5 years. Example- loans from banks, public deposits.
3. Short term: Taken for a period less than 1 year. Example- trade credit, factoring
On the basis of ownership, sources of finance can be as follows.
1. Owner's fund: Funds invested by the owners of the company. Example- equity shares, retained earnings
2. Borrowed fund: Funds invested by the outsiders. Example- debentures, loans form banks