Means of financing-
There is no ideal pattern concerning means of financing for a project. The means of financing is determined by a variety of factors and considerations like magnitude of funds required, risk associated with the enterprise, nature of industry, prevailing taxation, laws etc.
The following are the sources of finance:
– Share capital
– Long term borrowing (financial institutes / banks)
– Loans from friends and relatives
– Retained earnings
Financial institutes specify certain debt equity ratios and promoters will have to raise own finance to match these ratios.
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