Financial Business Essay Example | Topics and Well Written Essays - 1500 words

Financial Business - Essay ExampleThis type of financing is known as Debt financing.Businesses also raise funds by offering their stocks or shares to different financial institutions including banks and insurance loadeds, governments and general public at a defined Par or Stated value with or without a premium depending upon the market prices. A firm domiciliate issue a maximum number of shares that are known as Authorized shares and cant exceed that limit. Shares issued are known as Outstanding shares. Dividends are paid to shareholders who have owned the shares.Short term loans can be each secured that means that specific assets such as inventory are pledged as collateral or they can be unsecured that means the firm has not promised any assets as collateral. These loans are usually acquired from different financial institutions such as commercial banks, insurance companies or from financial groups such as private investors, individuals with savings and small/medium banking insti tutions at relatively higher interest rate to meet their current needs of finance.A commercial report card is an unsecured debt (in other words a promissory note) taken by businesses to finance the inventory purchases and various short-term liabilities such as wages, rent, fuel etc. Undoubtedly, they mature in less than 9 months or 270 days and have a lower interest rate than what a bank unremarkably charges from its clients. Only the large businesses with extensive financial resources, strength and power are able to sell commercial papers compared to small and medium scale enterprises, which do not enjoy extensive capital resources.Sales of stocks and bonds are a major source of finance for public limited companies, multinationals and large scale corporations. The exchange of shares results in cash inflows for the issuing firm and the buyer receives an ownership in that firm. Whereas, the sale of bonds receives an interest payment (calculated through the interest rate) along wi th the