Class 11 Business Studies - TAMILNADU
Sources of Business Finance
The chapter 'Sources of Business Finance' in Class 11 Business Studies (Tamil Nadu Samacheer Kalvi) explores the lifeblood of any business enterprise: capital. It covers the various ways businesses raise funds based on time period (short, medium, and long-term), ownership (owners funds vs. borrowed funds), and sources of generation (internal vs. external sources). Students will learn about equity shares, preference shares, debentures, retained earnings, trade credit, commercial paper, and financial institutions. Understanding these sources is crucial for making optimal financial decisions and holds significant weightage in the board examinations for both objective and descriptive questions.
Start Learning FreeKey Concepts
Owners Funds
Funds provided by the owners of the business, such as equity shares and retained earnings, which remain invested permanently and carry voting rights.
Borrowed Funds
Funds raised through loans, debentures, bonds, or public deposits that require a fixed rate of return and must be repaid on a specific maturity date.
Equity Shares
Represent ownership in a company where shareholders bear the ultimate risk and enjoy residual profits, along with voting rights in company meetings.
Retained Earnings
A portion of net profits kept back in the business for future expansion and growth, acting as an internal and self-financing source.
Trade Credit
Short-term financing extended by suppliers of goods and services to a business, enabling purchase without immediate cash payment.
Debentures
A formal instrument acknowledging a debt issued by a company, carrying a fixed rate of interest and usually secured against company assets.
Important Formulas
Board Exam Info
In the Tamil Nadu Samacheer Kalvi Class 11 Business Studies board exam, this chapter typically carries around 8 to 12 marks. Questions commonly include 1-mark objective questions, 2-mark and 3-mark short answers (such as differences between shares and debentures), and 5-mark long answers detailing various sources of business finance or classification of funds.
Frequently Asked Questions
What is the main difference between shares and debentures?
Shareholders are owners of the company who receive dividends and have voting rights, whereas debenture holders are creditors who receive fixed interest and have no voting rights.
Why is retained earnings considered a free source of finance?
Retained earnings are a part of undistributed profits generated internally, meaning the company does not incur floatation costs, interest, or brokerage charges to raise these funds.
What are the three categories of business finance based on time period?
Business finance is classified into long-term finance (more than 5 years), medium-term finance (1 to 5 years), and short-term finance (less than 1 year).
Learn Sources of Business Finance with Your AI Tutor
10 different ways to study this chapter. Free for 3 chapters per day.
Lecture
Key Points
Interactive
Quiz
Flashcards