It is better to use our own funds because that costs us nothing ‘.Do you agree?
Answers
Explanation:
yep I agree with u dear
There’s a pervasive myth that no debt is good debt. Whenever we’re talking about owing money these days, it’s almost always in a negative light. You hear it every day: homeowners are underwater, the national deficit is surging, consumers are saddled by shortsighted credit card spending, the nation’s graduates are buried under student loans.
For businesses, the truth about debt is far less ominous. As the high finance set understands, not all borrowing is bad. For small business owners who might not have a masters degree in finance, keeping the following four things in mind will help them use debt to gain leverage, rather than getting weighed down.
Related: How to Make Debt Work for Your Business
1. Debt is usually less expensive than giving up equity.
This is the most noteworthy of the following four points. When raising funds for your business, giving up equity is almost always more expensive in the long-run than taking on debt. Equity costs you a portion of your business, forever.
Think about it like this: when starting out, your small business needs inventory and equipment and to make payroll. Investors are going to help you with capital, but you’re sacrificing future profits indefinitely to fill a short to mid-term need. With debt, you incur interest costs, but it is temporary and capped. Once you pay it back, your equity remains intact.
There are very few situations where giving up a piece of your business works out to be the cheaper option. How do you know? If the sum of the expected cash flow (on a discounted basis) you’d be giving up for an equity investment are greater than the costs of the debt, then you are better off getting debt.
Answer:
Business is concerned with production and distribution of goods and services for the satisfaction of need of society. A business cannot function unless adequate funds are made available to it. The need of fund arises from the stage when an entrepreneur makes a decision to start a business. Some funds are needed immediately. The financial need of a business can be categorized in the following ways:
Fixed Capital Requirements: In order to start business, funds are required to purchase fixed assets like land and building, plant and machinery, and furniture and fixures. This is known as fixed capital requirement of an enterprise.
Working Capital Requirements: The financial requirements of an enterprise do not end with the procurement of fixed assets. No matter how small or large business, it need funds for its day-to-day operations. This is known as working capital of an enterprise which is used for holding current assets like stock, bill receivable, current expenses etc. Therefore, a business needs funds to meet its fixed as well as working capital requirements.