11th NCERT Business Studies Chapter 8

– Meaning and Significance of Business Finance: Finance required by a business to establish and run its operations is known as business finance. No business can function without an adequate amount of funds for various activities. The funds are required for purchasing fixed assets, running day-to-day operations, and undertaking growth and expansion plans in a business organization【4:2†source】.

– Classification of Sources of Funds: Various sources of funds available to a business can be classified based on three major criteria: time period (long, medium, and short-term), ownership (owner’s funds and borrowed funds), and source of generation (internal sources and external sources)【4:2†source】.

– Long, Medium, and Short-term Sources of Funds: Long-term sources provide funds for periods exceeding 5 years, medium-term sources cover periods between more than 1 year to 5 years, and short-term sources cater to periods not exceeding 1 year【4:4†source】.

– Owner’s Funds and Borrowed Funds: Owner’s funds are provided by the owners of an enterprise, while borrowed capital refers to funds generated through loans or borrowings from other individuals or institutions【4:4†source】.

– Factors Affecting the Choice of a Source of Finance: Key factors to consider when choosing a source of finance include financial strength and stability of operations, form of organization, purpose and time period for funds, risk profile, control implications, and impact on credit worthiness【4:4†source】.