Cheat sheet · Class 11 · CBSE · Commerce Business Studies
Sources of Business Finance cheat sheet
The whole chapter on one page: key formulas, facts and the points to remember, for quick revision before a test.
CBSE Class 11 · Business Studies
Cheat sheet
Chapter 7Sources of Business Finance
Owner's funds (shares, retained earnings) vs Borrowed funds (debentures, loans).
1. Classification
| Basis | Types |
|---|---|
| Period | long term (5+ yrs), medium (1–5 yrs), short term (< 1 yr) |
| Ownership | owner's funds, borrowed funds |
| Source | internal, external |
2. Sources
| Source | Notes |
|---|---|
| Equity shares | owners; voting rights; dividend not fixed |
| Preference shares | fixed dividend; preference in dividend & capital |
| Retained earnings | ploughing back profit; no cost of issue |
| Debentures | borrowed capital; fixed interest |
| Commercial banks | loans, cash credit, overdraft |
| Trade credit | credit from suppliers |
| Factoring | selling receivables |
| Public deposits | invited from the public |
| Commercial paper | short-term promissory note |
| Lease financing | use asset for rent |
International: ADRs, GDRs, FCCBs, commercial bank loans abroad.
3. Key Points
- Equity = risk capital.
- Debenture interest is tax deductible.
- Choice depends on cost, risk, control, flexibility.
- Retained earnings may dissatisfy shareholders.
Remember: Period/ownership/source | equity vs debenture | short-term sources
Sources of Business Finance: questions and notes
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