Choosing a Source of Finance

Jun 27th, 2015
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Academy of Art University
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Corporate investment has been a significant source of economic growth over the past several years. In the past decade, there has been tremendous growth in overall investment levels in India, from less than 25% of GDP in 2000 to over 35% by 2006. A significant part of this investment drive has come from the corporate sector. Over the past five years, corporate investment as a share of India’s GDP grew by 9 percentage points. Given the links between a country’s investment levels and its overall economic growth, corporate financing and investment are crucial components of India’s future growth potential. This paper focuses on the various sources of corporate financing that are used to fund this corporate investment.

Word Count: 1670
Showing Page: 1/38
* Sources of financeBusiness StudiesFinance and AccountingUnit 5; Chapter 26*Why business activities require finance*Differences between capital and revenue expenditure*Importance of working capital and how to manage it*Analyze the different sources of finances*Role played by main financial institutions*Appropriate sources of finances for different businessneeds*Analyze the factors the managers consider whentaking financial decisions*Topics coveredWhy do we need to studyfinance?Almost half of all newventures fail becauseof poor financialmanagement-Dun & Brandstreet3* Finance decisions are some of the mostimportant decisions the managers have to take* Inadequate and inappropriate finance businessfailure, expensive to the business or loss ofownership*Introduction tobusiness finance* For start-up capital- inject cash to set up business* Finance for working capital- capital needed to payday-to-day running costs- wages, credits tocustomers, raw materials etc.* Internal growth/ expansion of business- highercapital needs* External expansion by takeovers and mergers* Special situation- recession, bad credits* Research and development*Why business activityrequires finances?Short termfundingMedium term Long termfundingfunding One or less than One to fiveone yearyearsrequirementrequirement Fundingrequirement formore than fiveyears* Short, medium and long termfinancingCapitalExpenditureR

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