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What are the sources of fund in finance and accounting?
Source of finance can be simply explained as follows −
- Based on time
| LONG TERM | MEDIUM TERM | SHORT TERM |
|---|---|---|
| BASED ON TIME | ||
| Equity shares | Preference shares | Trade credit |
| Preference shares | Debenture/Bonds | WC loans |
| Internal accruals |
| Fixed deposits (period of 1 year) |
| Debentures/bonds | Advances from customers | |
| Term loans | Creditors | |
| Venture funding | lease finance | Payables |
| Asset securitization | Hire purchase finance | Factoring services |
| International finance | Bill discounting | |
- Based on ownership and control
| Owned | Borrowed |
|---|---|
| Based on ownership and control | |
| Equity capital | Loans from Financial institutions Commercial loans |
| Preference capital | |
| Retained earnings | |
| Convertible debentures | Debentures |
| Venture fund/ private equity | |
- Based on source generation
| Internal | External |
|---|---|
| Based on source generation | |
| Equity capital | Retained profits |
| Preference capital | Reduction in working capital |
| Retained earnings | Sale of assets |
| Convertible debentures | |
| Venture fund/private equity | |
Updated on 12-Aug-2020 11:18:05
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