Sources of Business Finance — Chapter Summary
ICSE · Class 12 · Business Studies
Summary of Sources of Business Finance for ICSE Class 12 Business Studies. Part of the ICSE Class 12 Business Studies syllabus.
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Overview
Business finance is needed to start, run, and expand a business. Firms raise funds from owned sources and borrowed sources. Owned funds include equity shares, preference shares, retained profits, global depository receipts, angel investors, venture capitalists, crowd funding, and peer-to-peer fundin
Key Concepts
Equity shares are ordinary shares
Equity shares are ordinary shares that carry no preferential rights in dividend payment or capital repayment. They are issued before any other type of
Preference shares carry preferential rights
Preference shares carry preferential rights in dividend payment and repayment of capital. Dividend is fixed and paid before equity dividends, but only
A debenture is a document under
A debenture is a document under the company seal acknowledging debt and promising repayment with interest at a fixed rate. Debenture interest is payab
Retained profits
Retained profits, also called ploughing back of profits or self financing, mean retaining part of net profit year after year and reinvesting it in the
Loans are obtained from financial institutions
Loans are obtained from financial institutions and commercial banks. IFCI, SFCs, and SIDBI provide mainly long-term loans, while SBI, BOB, and PNB usu
Learning Objectives
- Identify the main sources of business finance.
- Distinguish between owned funds, borrowed funds, and hybrid security.
- Understand the features of equity shares, preference shares, and debentures.
- Explain internal finance through retained profits.
- Describe term loans, public deposits, trade credit, and bill discounting.
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Content is aligned to the official syllabus. Refer to the board website for the latest curriculum.
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