Max Business

The 30-share sensitive index (Sensex) of the Bombay Stock Exchange today opened with negative gap of 416 points and plunged by 524 points before closing at.
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The key features of owned funds are given below:

Provision of risk Capital: Ownership funds provide risk capital because owners bear the risk of loss.  In the event of low profits, owners do not get adequate return of their investment.  When business is non successful, owners may not be able to recover even their original investment after paying he creditors of business.  In case of high profits owners receive goods returns.

Permanent Funds: Ownership funds remain permanently invested in the business.  These funds are nonrefundable before the closure of business.  Ownership capital is available for all purposes throughout the life of the business.

No Security: Ownership funds can be raised without offering any security of assets.

Separation of Ownership form Management: A company is managed by officers under the supervision and control of board of directors. Directors are elected by the shareholders.  Although shareholders are the owners of the company the responsibility of management does not lie with them.

• 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 main sources of short-term finance are:

Trade Credit: It refers to credit granted bygone business firm to another. Trade credit is granted without any security for periods ranging from seven days to six months. The price charged for goods supplied on credit is generally higher than that charged on cash sales.

Bank Credit: Commercial banks provide short-terms finance to business in the form of overdraft, accredit, discounting of bills, and advances. Credit is provided gnome security and interest is charges.

Installment Credit: Under this system, a businessman can buy a buy an asset without making full payment. The amount is payable uninstallers along with interest.

Hire Purchase: In this system also price is payable in installments. But each installment is created as a hire charge. The buyer becomes owner of the asset after payment of the last installment.

Lease Finance: The owner of the asset hires it out to a business firm for a fixed period and/or rent. After the expiry of lease period the owner may sell the asset to the lessee or may take it back.

Commercial Paper: A company can issue commercial paper than matures payment between three and six months. The company must satisfy the prescribed conditions before issuing such paper.

Customer Advances: A business firm can raise short-term finance by asking its customers to make advance payment against goose ordered by them.

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.

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.

Business finance means money or funds required and used beguines firms. Financing means making money available when it is needed.  In the worst or Ronald Burns, financing is the process of organizing the flow of funds so that a business can carry out its objectives in the most efficient manner an meet the obligations as they fall due.
Business finance refers to procurement and utilization of money for business purpose. Every business enterprise requires some money to start with. Moneys also required bridging the time gap between production and sale of goods.  However, he amount of fiancé required differs form one business enterprise to another depending upon denature and scale of operations. The amount of funds almoner’s from one time period to anther.

Wholesalers are of three types:
Manufacturer wholesalers
Retail wholesalers
Pure wholesalers.

Wholesalers may be classified into three types as under:

Manufacturer Wholesaler: This type of wholesaler undertakes production of goods as well as their distribution to retailers. Usually, heroes not deal in goose manufactured by other firms. He is in a position to minimize the overhead expenses on transpiration, warehousing, etc. by combining manufacturing an distribution activities.
Retail Wholesaler: He sells to entailers as well s to urinate consumers. He combines wholesale retail activities. This enables him to establish direct contact with the consumers and to reduce the costs of distribution. He is in a position to now the preferences of consumers.
Pure Wholesaler: A pure or true wholesaler does not engage introduction or retail trade. He concentrates on buying form manufactures a selling to the retailers. He is also known as merchant wholesaler. He cans betted serve other produces and retailers. According to Evelyn Thomas, “a true wholesaler is neither a manufacturer nor a retailer at aces as a link between the two”.

Services rendered by wholesalers are:
Services to Manufacturers

Concentration of Production: Wholesalers relieve he manufactures form the anxiety of selling their products install loss to widely scattered retailers.  As a result manufacturer’s ca concentrates better on manufacturing activities.  Wholesalers maintain a sales force who contact, persuade a sell products of different manufactures to retailers.  Producers need not spend much on advertising and publicity.

Easy Distribution: Wholesalers serve as the distribution agents of manufactures.  They help producer’s insider distributions of goods through retailers.  Wt the help of wholesales. Manufactures can distribution of goods through repairs.  With the help of wholesalers, manufactures can reach customers scatter over all parts of he country.

Economies of Scale: Wholesalers collect small orders foresails and buy goods in bulk from manufactures.  This enables manufacturer’s traduce goods on large scale and minimize the cost per unit by employing modern technology.

Warehousing: Wholesalers maintain large stocks of goods.  Manufacturer’s r labels to sell their output immediately and need not arrange storage facilities.  Therefore, their risks and costs are reduced.  They came better use of capital.

Market Information: Wholesalers collect important information concerning changes in demand, competition, etc.  From the retailers.  They pass on the information to manufacturers.  Such information enables the manufactures to produce goose according to changing conditions in the market.

Financial Assistance: Wholesales genre buy goose on cash and make advance payments against big orders. This reduces the financial burdening manufactures.

Price Stabilization: Wholesalers hold stocks during off season and sell them during the period of peak demand.  This helps to reduce wee fluctuations pinpricks.

Physical Distribution: Wholesalers provide transportation facilities for physical movement of goods form the producer to the retailer.  They clambake quick and frequent deliveries of good to retailers.

Services to Retailers

Ready Supply: Wholesalers provide quick delivery of different varieties of goods install quantity to entails.  They main tainregualr supply of goose of different manufacturers. Retailers can buy as and when necessary to satisfy the varying needs of consumers.

Advice and Information: Wholesalers specialize uncertainties of products and possess expert knowledge of the trade.  They can advise the retailer on quality, pries, timing of purchase, etc.  They also give information about the new products entering the market.  Retailers get benefits of specialization form wholesalers.

Warehousing: As wholesalers maintain huge stock of good, retailers are relieved of the need for holding large stocks and making storage arrangements.

Financing: Wholesalers sell goods t retailers on credit.  Retailers often pay back after receiving payment from consumers.  As a result, retailers can carry on business with smaller amount of working capital.

Risk bearing: Wholesalers hold large quantities of goods and thereby assume risks of spoilage and damage to goods and price fluctuations retailers need not maintain large stock of goods, and need noisome risk of spoilage or damage to goods.

Transportation: Wholesalers arrange for transportation facilities and deliver goods at the door steps of retailers.