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unit-5-methods-of-raising-finance

Unit-5 Methods Of Raising Finance

In this unit you will learn why finance is needed, what the sources of finance and the methods of raising finance.

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State the methods of raising fixed capital?

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Learning Pundits Content Team

Written on Jun 24, 2019 4:16:14 PM

For a sole proprietor, there are limited opportunities for raising funds. He can finance his business by any of the following means:

  1. Investment of own savings
  2. Raising loans from friends and relatives
  3. Arranging advances from commercial banks
  4. Borrowing from finance companies

In the case of companies, there are a number of methods of raising finance. To raise long-term and medium-term capital, companies have the following options:

  1. Issue of shares
  2. Issue of debentures
  3. Loans from financial institutions
  4. Loans from commercial banks
  5. Public deposits
  6. Retention of profits

The following methods may be used to finance short-term capital:

  1. Trade credit
  2. Factoring
  3. Discounting bills of exchange
  4. Bank overdraft and cash credit
  5. Public deposits