Max Business

• Owned funds or equity refer to the money contributed by owners of business and the profits reinvested in business. Such funds provide ‘risk capital’ and remain permanently invested in the business. Owners are entitled to exercise control month management of business. In a company, funds raised by the issue of shared and retained profits constitute owned funs.

• Borrowed funds or debt mean the funds raised y way of loans and credit. Such funds are raised for specified periods at fixed rates of interest. Creditor who provide these funds do not have the right to exercise control on the management of business. Debentures. Loaned and public deposits are main sources for borrowed funds.

The short-term and long-term sources of company finance are as follows:

SOURCES OF COMPANY FINANCE

Short-term Finance
1. Trade credit
2. Bank loans and advances

3. Short-term loans from financial Institutions

4. Advances from customers

Long-term Finance

1. Equity shares

2.Preference shares

3.Debentures

4.Loans from financial institutional
5. Retained profits
6. Public deposits

On the basis of the purpose to be served, there are three types of finance.

Long-term Finance: Funds invested in thousands for a long period, see more than five years are called long-term finance. This type of finance is used for acquiring fixed assets like land and buildings, plant and machinery, etc. The amount of long-term finance required depends on the nature a size of business. A manufacturing concern needs more long-tar finance than a trading firm. Similarly, large business firms require more long-term funds than small firms.

Medium- term Finance: Funds required for modernization of plant and machinery, introduction of a new product, adoption of new methods of production or distribution or advertising campaigns are called medium tar-finance. Medium-term finance is required for a period of two to five years.

Short- term Finance: This type of finance is required to hold stocks of raw materials and finished goods and to meet day-to-day expenses. Short-term finance is also known as working capital. It I required for a short period of unto one year. The amount of short-term finance required depends month nature of business, volume of binges and the time ape between commencement of production (or purchase of goose) and their sale. A trading firm needs more working capital whereas a manufacturing firmer quire more fixed capital. A rage enterprise needs more working capital than a small enterprise. If the time gap between production and sale is long, greater working capitalist required. For example, a hand loom requires more working capital than a power loom.

Short-term finance is required to meet the working capital requirements of business. It is required for a short period of unto one year for holding stock of raw materials and finished goods and to pay for the day-to-day expenses. There is a time gap between production and sales. Short-term finance is required dicing this gap. Short-term finance is knows as working capital or circulating capital. The production and sale cycle is generally completed in one year. Therefore, short-term funds are used again and again form year to year. The amount of short-term finance required depends on the nature of business, time gap between start of production and sale of goods and volume of business. A trading concern needs more short-term capital than a manufacturing concern. When the time gap between the stat of production and sale of goods is long, more short-terms funds are required. A large scald firm needs moor short-term funds than a small scald firm.

Long-term finance reefs to the funds required for procuring fixed asses and for expansion and growth of business. Fixed assets include those asses which are used infusions to generate revenue. Land and buildings, plant and machinery, furniture and fixtures, etc. are examples of fixed assets. Long-term finance is required for a long void (say more than five years). It is also known as fixed capital. The amount of long-term finance required depends on the nature and size of businesses. For example, a manufacturing firm requires more long-term funds than a trading firm. Similarly, a large scale manufacturing enterprise requires greater long-term finance than a small scale firm.

Funds required for investment impermanent working capital and repayment of loans is called medium-term finance. It is also used for modernization of plant and machinery, introduction of a new product, adoption of new methods of production or distribution, advertisement campaign, etc. Medium-term finance is required for a period of exceeding one year but not more than five years. Need for medium-term finance often arises due to changes in technology and increasing competition. The amount of medium-term finance required depends when the nature and purpose of investment.

Finance is the lifeblood of business. No business enterprise can be started and operated with out adequate funds. In modern business, finance is required for the following purposes:

• To start a business, machinery, land and buildings, and other fixed asses must be purchased. Money required for the purchase of fixed ashes is called fixed capital.

• Money is required for purchase of raw materials, payment of wages and salaries and other expenses. It takes time to produce and sell goods. During this period, working capital is needed.

• Finance is required for replacement of worn-out plant and machinery. Without adequate funds, a business firm cannot modernize plant or machinery or use new methods of production and distribution.

• Funds are needed for expansion and growth of business.

Thus, finance is needed at every stage in eh life of a business. This importance of finance his increased with the growth of business. In modern business. Large amount of funds if needed for large scale production’s distribution. Changing business environment and increasing competition may require new methods of production and distribution. It may be come necessary to introduce new products and service in the market and to improve existing products and services. Additional investment for these purposes requires more funs. Adequate finance must be available at the right time to make business successful.

Arguments in favor of social responsibilities of business are given below:

• It is in the long term interest of business to assume social responsibilities

• Business can abode government control by discharging its responsibility to society

• Socially responsible business behavior will help to improve the public image of business has power over society. This power should be balance with responsibility

• Business has the talent and resources to help society

• Business is a part of society an creates problems like pollution which it should take care of

• Business gets resources form the society

• It is morally justified to assume social responsibility

TATA Mutual fund, one of the leading fund houses in India has singned a marketing agreement with Dena Bank, a leading public sector bank, for distributing of its mutual fund products throught selsct branches of the bank across the country. The Memorandum of understanding was exchanged between Abhay Nagar, Vice Pricedent and Head retail sales, TATA asset management LTD and T.R Chawla, GM, Dena Bank.

via Google

It the good news for all the share holders that the Bombay stock exchange closes this week with the increase of 260 points. It is estimated that the rise in the Bombay stock exchange is due to the nuclear deal between the Indian government and Left Allies.

From morning it is seems that the Bombay stock exchange is not stable at all and marks its start form only 260.69 points and went to 14,424.87. Till now in Bombay stock exchange it is declared that out of 30 stocks 28 stocks end with the mark of profit.

There is a possibility that the nuclear deal will effect Congress government under the leader ship of Manmohan Singh but till now the leaders does not discuss any thing about the elections in this two days meeting.

The Bombay stock exchange today ratings is it is as low as 14,163.61 and as high as this day is 14,455.49.