Source of Finance

In management accounting, source of finance provides the power to company to buy fixed and current assets and pay loans. In other words, without source of finance, it may be difficult for company to operate the business. For starting and surviving the business, we need fixed and current capital and source of finance can give us these capitals, with fixed capital, we buy fixed assets and with current capital or working capital, we pay debt and buy current assets. Sources of finance may be depend on the financial requirement. Short term financial requirement can be fulfilled from bank credit and customer’s credit and long term financial requirement can be fulfilled from shares and debentures. Company can also use internal sources and external sources.

source finance

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Following are the main sources of finance: -

Equity

 Debt

Bond

Credits

Advances

Bank Finance

 Public Deposits

Retained Earning

Mutual fund

Hedge Fund

Venture Capital