Before we start , i will introduce to you about what is finance function ?
So finance function is the most important things in the company or business, it have link & relations to the others activities function and also finance function available in all the part in the company.
Financing is the act of providing funds for business activities, making purchase or investing . Financing also can meaning by asking any financial institution or another persons to lend you mo
Financial Institution & bank are in the business of financing as they provide capital to the business.
Companies Financing is all of the effort that the business or the company do to obtain funds with minimum cost of capital & favourable conditions & then how to allocate that funds as efficiency as possible .
Finish with Finance Function , now we will talk part of it which is CAPITAL
so the Capital is the money or wealth needed to produce goods or services , so without these capital the company cannot be operated.
Where we can get that capital ? of course from the Sources of capital !
But you need to know these first :
1. Saving is income that is not used/consumed .
2. Creation money by bank happens through creating demand deposit .
3. Intensification of the use of money in this way is done by banks to land back monies saved in the society.
Sources of capital by origin :
1. Internal Sources : derived from retained earnings & accumulated depreciation
2. External Sources : foreign capital & Owner's equity
3. Providers Who Come From Purchases On Credit.
After you know about that you also must know How fulfillment Fund / Capital .
1. Meeting the needs of its own funds in accordance with the needs of each individual asset to be financed is also called Partial Spending .
2. Meeting the needs of the overall funding by seeing all the requirements as a single entity and a group called the System total spending.
And the last you must know about : Guidelines for spending the terms of the liquidity !
1. Permanent Funding Needs (Constant) Principles , should be financed with its own capital long-term credit
2. Capital Requirment that vary in number (Variable Capital) principally financed by long-term credit .
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