Question

a) Evaluate options/ sources at Google for the financing of business activities.

b) Include the characteristics of the finances sources listed in question a.

Answer 1

ANS: Finance is a broad term that describes activities associated with banking, capital market , money or instruments.

The sources of finanacing for business activites are :-

1. Government funding - Government finance or boost business activities via providing various reliefs such as subisidies, rebate, tax relief, Grants etc.
2. Bootstrapping - It means building a company from ground up the nothing but personal saving, It helps the business to grow without external financing.
3. Friends & Family - These people will help the enterprenure in arranging funds. They might be the future investors.
4. Bank Loans - Mostly Banks provides the various terms of loan & they finance all assets need including working capital, equipment & real estate.
5. Angle Investors & Venture capitalist - Angle Investors are the wealthy investors who invest their own money into companies. Venture capitalist are the employees of venture capital firm that invest other's people money into companies.
6. Smart Leases - Leasing Fixed assets conserves cash for working capital; The cost of lease may be slightly higher than bank finacing but instant cash outflow of capital is avoided that prevents dilution of Equity.

The characteristics of Finance Sources:-

There are many characteistics of Finance sources-

• On the basis of Time period - Sources of finance is classified as Long term, Medium Term & Short Term
• On the basis of ownership & control - Sources are classified into Owned capital & Borrowed Capital.