3. A financial system: is a system that allows
the exchange of funds between lenders,
investors and borrower. Financial systems
operate at national, global and firm-specific
levels.
They consist of complex , closely related
services, markets, and institutions intended
to provide an efficent and regular linkage
between investors and depositors.
4. Basic need to become a entrepreneur is
fund without found a entrepreneur can not
established his idea.
So financial support system is that which
provide the guideline to arrange the fund for
the enterprise. As sources of fund where can
it obtained and in which form.
6. Fixed capital
It refers to funds used for purchase of fixed assets
like land , building, plant and machinery and other
expenses.
Working capital
It refers to funds used for raw material purchase,
payment of salaries / wages , rent , fuel ,
electricity ,etc. it is also known as Revolving capital
since it is continuously invested incurrent assets
and recovered through sale of products.
7. LONG TERM CAPITAL
It is usually for five years or more.
MEDIUM- TERM CAPITAL
Normally implying requirment of 2 to 5 years
SHORT – TERM CAPITAL
It is for a period less than 1 year.
8. EQUITY OR OWNERSHIP CAPITAL :
The investment is a permanent part of the
firm’s capital structure and raising equity is
possible by selling additional shares or by
investing profits back into bussiness.
DEBT CAPITAL :
It is a lower risk proposition , since it needs
to be repaid according to agreed schedule .
Debt capital can be firther sub- divided into
short-term – generally upto one year, and
mediu, term – one year to ten year.
13. TYPE OF FINANCE PERIOD OF REQUIRMENT PURPOSE
1. Short term
2.
3. Medium – term
4. Long - term
Less than 1 year
1 to 5 year
more than 5 year
Purchase of raw
materials
Payment of wages,
rent, etc
, expenditure of
advertisment
Purchase of land and
building plant and
amchinery
