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The document discusses the different sources of finance for a business, separating them into internal vs external sources, as well as short-term vs long-term sources. Internally, businesses can generate finance through day-to-day sales, loans from suppliers, reducing stock levels, and selling surplus assets. Externally, finance comes from banks, investors, and the government. Short-term finance covers daily operations and is paid back quickly, while long-term finance funds larger projects but is paid back over longer periods and is riskier.
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Sources of finance
This document discusses various long-term sources of finance for businesses. It defines long-term finance as those needed for over a year, often for expansion projects. The sources discussed include equity shares, preference shares, debentures, term loans, securitization, leasing vs hire purchase, and other options like IPOs, government subsidies, supplier's credit, private placements, venture capital and bank loans. The key attributes and processes for each type are outlined.
sources of finance
The document discusses various internal and external sources of finance for businesses. Internal sources include retained profits from operations, sale of assets, and owner's savings. External sources include bank overdrafts, trade credit, bank loans, leasing, hire purchase, mortgages, issuing shares, and debentures. When choosing a source of finance, businesses must consider factors like availability, time period needed (short vs long term), amount of money required, associated risks, and cost of the finance.
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Investment is putting money into financial assets with the goal of earning a profit in the future. There are four main steps to the investment process:
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2. Analyze potential investment securities by evaluating industry type, risk level, and expected returns.
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SOURCES OF FINANCE.....
This document discusses sources of finance for businesses. It identifies long-term sources like equity shares, preference shares, debentures, and long-term bank loans that provide fixed capital. Short-term sources include trade credit, installment credit, advances, bank overdrafts, bills discounted, short-term loans, and commercial paper that supply working capital and liquidity. The document also outlines factors to consider when choosing a source of finance like the purpose of funds, amount needed, costs involved, and tax implications.
Sources of finance and Role of Project Manager
The document discusses various sources of finance for projects and organizations. It describes sources categorized by period (long, medium, and short term), ownership (internal owner's funds vs external funds), and source of generation (internal vs external). Long term sources include equity shares, retained earnings, and debentures. Medium term sources include bank loans and public deposits. Short term sources include trade credit and overdrafts. The roles and responsibilities of a project manager are also outlined.
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This document discusses the differences between investment and speculation. Investors take a long-term approach with moderate risk and return expectations based on careful analysis of company fundamentals. Speculators have a short-term horizon with high risk tolerance and rely on technical charts and market psychology rather than fundamentals. The document also outlines different types of investors, approaches to security analysis, and common errors in investment management such as inadequate understanding of risk and return, poorly formulated investment policies, and improper diversification.
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Sources of finance
This document discusses various long-term sources of finance for businesses. It defines long-term finance as those needed for over a year, often for expansion projects. The sources discussed include equity shares, preference shares, debentures, term loans, securitization, leasing vs hire purchase, and other options like IPOs, government subsidies, supplier's credit, private placements, venture capital and bank loans. The key attributes and processes for each type are outlined.
sources of finance
The document discusses various internal and external sources of finance for businesses. Internal sources include retained profits from operations, sale of assets, and owner's savings. External sources include bank overdrafts, trade credit, bank loans, leasing, hire purchase, mortgages, issuing shares, and debentures. When choosing a source of finance, businesses must consider factors like availability, time period needed (short vs long term), amount of money required, associated risks, and cost of the finance.
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It is assumed that information structure and the factors in the market systematically influence individuals investment decisions as well as market outcomes.
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steps involved in Investment process
Investment is putting money into financial assets with the goal of earning a profit in the future. There are four main steps to the investment process:
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2. Analyze potential investment securities by evaluating industry type, risk level, and expected returns.
3. Value securities by estimating their future benefits and comparing to current market prices to determine attractiveness.
4. Construct a portfolio by selecting a diverse mix of assets that balance safety, growth, liquidity and meet the investor's goals. The portfolio should be regularly evaluated and adjusted if needed to keep optimizing performance.
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This document discusses sources of finance for businesses. It identifies long-term sources like equity shares, preference shares, debentures, and long-term bank loans that provide fixed capital. Short-term sources include trade credit, installment credit, advances, bank overdrafts, bills discounted, short-term loans, and commercial paper that supply working capital and liquidity. The document also outlines factors to consider when choosing a source of finance like the purpose of funds, amount needed, costs involved, and tax implications.
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The document discusses various sources of finance for projects and organizations. It describes sources categorized by period (long, medium, and short term), ownership (internal owner's funds vs external funds), and source of generation (internal vs external). Long term sources include equity shares, retained earnings, and debentures. Medium term sources include bank loans and public deposits. Short term sources include trade credit and overdrafts. The roles and responsibilities of a project manager are also outlined.
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This document discusses the differences between investment and speculation. Investors take a long-term approach with moderate risk and return expectations based on careful analysis of company fundamentals. Speculators have a short-term horizon with high risk tolerance and rely on technical charts and market psychology rather than fundamentals. The document also outlines different types of investors, approaches to security analysis, and common errors in investment management such as inadequate understanding of risk and return, poorly formulated investment policies, and improper diversification.
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Sources of Finance
Benefits
Drawbacks
Large sums of Investors will
money can be
expect a large
raised
share of the
business and
No need to
profits in return
repay for 5-10
years
Loss of control
for the original
owners
The student was given homework to complete budget tasks and the teacher wants to collect it now. The teacher instructs students to have their homework on their desk within 2 minutes or the teacher will be annoyed. The document then provides information on various sources of business finance, including internal sources like retained profits and owner's funds, and external sources like bank loans, overdrafts
Investment
The document defines investment as committing funds to assets with the expectation of receiving future benefits or increasing the value of those assets. It lists the key elements of investment as return, risk, time, money, and securities. The main types of securities discussed are equity, debt, hybrid, and derivative securities. The document distinguishes investment from speculation and gambling, noting that investment involves a long time horizon, limited risk, and decision making based on analysis, while speculation and gambling involve higher risk, uncertainty, and decisions based on less information. Hedging is defined as making an investment to reduce the risk of adverse price movements in an asset.
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2. It recommends practices for investors like continuously learning, understanding objectives and risk tolerance, comprehensively evaluating options, and not making comparisons or changing investments too frequently.
3. The conclusion urges focusing on feeling good when making important decisions and gaining a pragmatic approach through recommendations to become a cognizant long-term investor.
Instruments of funds
The document discusses different instruments that companies use to raise funds. It identifies long term funds as those that last 7+ years and help create production facilities. Medium term funds last 5-10 years and help fund projects. Short term funds last less than 5 years and are used as working capital to ensure smooth operations. Common instruments for raising long, medium, and short term funds include issuing shares and debentures, loans from banks and financial institutions, bonds, lease financing, public deposits, commercial papers, customer advances, and trade credits.
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Risk involves uncertainty about potential future problems or losses. It describes the variability in returns around an expected average outcome. There are several types of risk, including market risk from macroeconomic factors, purchasing power risk from inflation, interest rate risk for bond prices, and business risks from uncertainties like changes in tastes, competition or policies. Financial risk specifically refers to the possibility of sudden monetary losses related to financing.
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This presentation provides a piece of basic information about the investment. It also deals with the various aspects of investment. It also talks about saving, speculation, and gambling. It also deals with the difference between investors and speculators. The objectives, processes, and avenues of investment are also mentioned in this presentation.
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This document discusses the key differences between investment and speculation. Investment involves committing money for long-term gains with low to moderate risk and returns based on fundamentals. Speculation involves short-term, high risk bets with potential for high returns based on market psychology. The document also outlines the traditional two-step investment decision process of security analysis and portfolio management to evaluate individual assets and construct a balanced portfolio.
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Investment risk management involves diversifying investments across different market sectors to reduce risk, avoiding overpaying for overpriced stocks, and having clear investment goals aligned with either long-term or short-term strategies. Key aspects of risk management include conducting fundamental analysis of stocks to evaluate pricing and financial ratios, diversifying across different industries that may be impacted differently by economic conditions, and maintaining a long-term perspective when investing rather than being swayed by short-term market volatility. The document provides tips on how to approach investment risk management through diversification, fundamental analysis, aligning with investment time horizons, and avoiding making decisions based on shifting economic sentiment.
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The document discusses asset allocation and its importance in financial planning. It defines asset allocation as a strategy for choosing between different types of investments like stocks and bonds. A large part of financial planning involves finding an asset allocation that matches a person's risk tolerance and needs. The document states that asset allocation is often the key determinant of long-term returns on a portfolio. It then presents a "bucket concept" that categorizes different asset types into security, growth, and momentum buckets with suggested allocations based on a person's age and risk profile.
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- Convertible debt provides a bridge to the next round of funding and includes interest accrual.
- It converts to equity on the same terms as new investors but at a discount (15-25%) and subject to a maximum valuation cap.
- Complications can arise around valuation, time of conversion, and investor protections, which are addressed through mechanisms like caps, floors, and governance terms.
- Convertible debt works well as a bridge, for seed financing when
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Quick reference for exams and helpful for class presentations
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https://youtu.be/y2W1qOIWu28
Source of finance
Internal sources of finance for a business include cash from daily sales, extended credit from suppliers, and reducing stock levels. External finance comes from individuals or organizations outside the business, such as banks or investors. There are also differences between short-term and long-term financing. Short-term finance covers day-to-day operations and is paid back quickly, while long-term finance funds larger projects over multiple years and typically requires some security. A business can obtain funding from either internal or external sources.
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This document discusses various internal and external sources of finance that businesses can use to obtain funding. Internal sources include owner's investment, retained profits, sale of stock, sale of fixed assets, and debt collection. External sources include bank loans, overdrafts, additional partners, share issues, leasing, hire purchase, mortgages, trade credit, and government grants. The choice of financing depends on factors like the purpose of funds, time period needed, amount required, and type of business ownership.
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Valuation ratios of promotor / promotor group;
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The document discusses building a diverse investment portfolio. It explains that different asset classes like equities, bonds, cash, and property behave differently and need to be balanced based on an individual's priorities, risk tolerance, growth expectations, and time horizons. Each asset class offers different characteristics in terms of volatility, growth potential, and income. The document advises diversifying across many investments within each class to reduce risk.
Sources of Finance
Benefits
Drawbacks
Large sums of Investors will
money can be
expect a large
raised
share of the
business and
No need to
profits in return
repay for 5-10
years
Loss of control
for the original
owners
The student was given homework to complete budget tasks and the teacher wants to collect it now. The teacher instructs students to have their homework on their desk within 2 minutes or the teacher will be annoyed. The document then provides information on various sources of business finance, including internal sources like retained profits and owner's funds, and external sources like bank loans, overdrafts
Investment
The document defines investment as committing funds to assets with the expectation of receiving future benefits or increasing the value of those assets. It lists the key elements of investment as return, risk, time, money, and securities. The main types of securities discussed are equity, debt, hybrid, and derivative securities. The document distinguishes investment from speculation and gambling, noting that investment involves a long time horizon, limited risk, and decision making based on analysis, while speculation and gambling involve higher risk, uncertainty, and decisions based on less information. Hedging is defined as making an investment to reduce the risk of adverse price movements in an asset.
Sources Of Finance
A run through the main sources of finance for business organisations. Useful for Standard Grade Business Management and Higher Business Management
Investment Decision Making
1. The document summarizes research on behavioral economics and investment decision making, outlining factors that influence risk appetite and decisions like myopic loss aversion, information overload, and sunk cost bias.
2. It recommends practices for investors like continuously learning, understanding objectives and risk tolerance, comprehensively evaluating options, and not making comparisons or changing investments too frequently.
3. The conclusion urges focusing on feeling good when making important decisions and gaining a pragmatic approach through recommendations to become a cognizant long-term investor.
Instruments of funds
The document discusses different instruments that companies use to raise funds. It identifies long term funds as those that last 7+ years and help create production facilities. Medium term funds last 5-10 years and help fund projects. Short term funds last less than 5 years and are used as working capital to ensure smooth operations. Common instruments for raising long, medium, and short term funds include issuing shares and debentures, loans from banks and financial institutions, bonds, lease financing, public deposits, commercial papers, customer advances, and trade credits.
Risk Return Trade Off
Risk involves uncertainty about potential future problems or losses. It describes the variability in returns around an expected average outcome. There are several types of risk, including market risk from macroeconomic factors, purchasing power risk from inflation, interest rate risk for bond prices, and business risks from uncertainties like changes in tastes, competition or policies. Financial risk specifically refers to the possibility of sudden monetary losses related to financing.
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This presentation provides a piece of basic information about the investment. It also deals with the various aspects of investment. It also talks about saving, speculation, and gambling. It also deals with the difference between investors and speculators. The objectives, processes, and avenues of investment are also mentioned in this presentation.
Investment and speculation
This document discusses the key differences between investment and speculation. Investment involves committing money for long-term gains with low to moderate risk and returns based on fundamentals. Speculation involves short-term, high risk bets with potential for high returns based on market psychology. The document also outlines the traditional two-step investment decision process of security analysis and portfolio management to evaluate individual assets and construct a balanced portfolio.
Investment Risk Management
Investment risk management involves diversifying investments across different market sectors to reduce risk, avoiding overpaying for overpriced stocks, and having clear investment goals aligned with either long-term or short-term strategies. Key aspects of risk management include conducting fundamental analysis of stocks to evaluate pricing and financial ratios, diversifying across different industries that may be impacted differently by economic conditions, and maintaining a long-term perspective when investing rather than being swayed by short-term market volatility. The document provides tips on how to approach investment risk management through diversification, fundamental analysis, aligning with investment time horizons, and avoiding making decisions based on shifting economic sentiment.
Asset allocation
The document discusses asset allocation and its importance in financial planning. It defines asset allocation as a strategy for choosing between different types of investments like stocks and bonds. A large part of financial planning involves finding an asset allocation that matches a person's risk tolerance and needs. The document states that asset allocation is often the key determinant of long-term returns on a portfolio. It then presents a "bucket concept" that categorizes different asset types into security, growth, and momentum buckets with suggested allocations based on a person's age and risk profile.
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This document provides an introduction to finance concepts for a business principles course. It discusses key topics like the importance of cash over profit, debt versus equity sources of funding, and the working capital cycle. The learning outcomes are to explain the difference between cash and profit, compare debt and equity, evaluate financing options, and understand the importance of cash flow to a business. The document also outlines different sources of funding like loans, leasing, overdrafts, and shares, and how their costs vary based on risk level.
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Convertible Debt Simplified
This document discusses convertible debt, which is used as an alternative to equity financing for seed-stage companies. Convertible debt allows investors to loan money to a company that converts to equity at a later financing round. The key aspects covered are:
- Convertible debt provides a bridge to the next round of funding and includes interest accrual.
- It converts to equity on the same terms as new investors but at a discount (15-25%) and subject to a maximum valuation cap.
- Complications can arise around valuation, time of conversion, and investor protections, which are addressed through mechanisms like caps, floors, and governance terms.
- Convertible debt works well as a bridge, for seed financing when
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This document discusses the three major financial decisions that financial managers must make: investment decisions, financing decisions, and dividend decisions. It provides details on the types of assets and projects considered under investment decisions. Financing decisions involve determining the appropriate capital structure and balancing the costs and risks of debt vs. equity. Dividend decisions relate to determining the optimal dividend payout policy that maximizes shareholder wealth. The document also outlines several factors that affect each type of financial decision.
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Mutual funds allow investors to pool their money together and have a professional fund manager make investment decisions on their behalf. The key benefits of mutual funds are professional management, diversification of risk, and low minimum investment amounts. There are various types of mutual funds classified by investment objective, including stock funds, bond funds, money market funds, and balanced funds. Investors can evaluate mutual funds based on factors like expenses, past performance, investment strategy, and whether they are actively or passively managed. Mutual funds are purchased from fund companies and can be held for income dividends, capital gains, or long-term appreciation when shares are eventually sold.
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This document discusses different types of risk in investing, including systematic risk, unsystematic risk, market risk, interest rate risk, purchasing power risk, financial risk, business risk, and political risk. It provides tips for minimizing different types of risk exposure such as studying a stock's price behavior and beta, holding investments to maturity, diversifying investments, analyzing industry and company trends, and considering a company's capital structure.
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This document discusses various long-term sources of finance for businesses. It describes long-term finance as funding needed for over a year, such as for expansion projects. The sources of long-term finance mentioned include shares, debentures, venture capital, government grants, bank loans, mortgages, internal accruals, and term loans. Each source is then discussed in 1-2 paragraphs, covering features like interest rates, security, repayment terms, and procedures for obtaining financing.
Sources of finance
This document summarizes various sources of finance for businesses, including internal sources like retained profits and external sources like different types of debt and equity. It outlines short-term debt options for businesses like overdrafts and commercial bills, as well as long-term debt options like mortgages, debentures, and leasing. The document also discusses equity sources such as new share issues, rights issues, placements, and private equity investments.
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John convery of west palm beach a financial professional
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Sourceoffinance 110510103921-phpapp01
- 1. By the best team Team members:Grace, Dimitry, Celli, Alan, tiffany
- 2. Outline • Internal sources • External sources • Longterm sources • Shorterm sources
- 3. Source of finance Internal source External source Ownership capital Non-ownership capital Long term source Short term source
- 4. Internal and External Sources • Internal Sources of Finance – Come from trading of business – Day to day cash from sales to customers – Money loaned from trade suppliers through extended credit – Reductions in amount of stock held by business – Disposal (sale) of any surplus assets no longer needed (e.g. selling a company car) • External finance – Comes from individuals or organisations who do not trade directly with business – E.g. banks, investors. government
- 5. Internal sources Personal savings Retained profits Working capital Sale of fixed assets
- 6. Ownership capital Non-ownership capital
- 7. Short and Long-term Finance • Short term finance – Needed to cover day to day running of business – Paid back in a short period of time, so less risky for lenders • Long term finance – Tends to be spent on large projects which will pay back over a longer period of time – More risky so lenders tend to ask for some form of insurance or security if company is unable to repay loan. – A mortgage is an example of secured long-term finance
- 8. • Short term:finance the business for up to 1 year • Medium term: finance the business for up to 5 years • Long term:finance the business for more than 5 years
- 10. Share Long term source Debent ure Venturd capital Bank loan mortag age Owner capital Asset sales Rataine d profit Internal accural
- 11. Bank overdraf t Short term sources Trade credit Credit card Short term bank loans
- 12. Internal and external finance • Finance can be obtained from either internal or external sources – Internal means it comes from within the business – External means it is obtained from outwith the business