Finance is the major part in running a firm. Distribution of finance to each and every department is based upon the requirements of that department and the situation of the business. Requirement of finance can be broadly classified into following −
Sources of finance shows the mobilization of funds for their requirement. To meet their long term and short term requirements firm needs amounts to meet their requirements. Based on mobilization of funds various sources are classified as below
There is another category, where the above sources of funds are categorised into three types as mentioned below −
Security finance − It is a certificate/instrument, which has monetary value and can be traded. It is classified into debt securities, equity securities and derivatives.
Internal finance − Retained earnings, sale of asset and reduction in working capital.