Sources of Capital means the ways by which capital can be raised by the Company/firm/Proprietor. Capital is needed to need to make their products or to provide their services.Traditional areas of need may be for capital asset acquirement - new machinery or the construction of a new building or depot. The development of new products can be enormously costly and here again capital may be required. Normally, such developments are financed internally, whereas capital for the acquisition of machinery may come from external sources.
Following are different sources of capital.
Shares, Debenture, Long-term loans, Reserve funds, Euro Bonds, Commercial Paper, Short Term Loans, Bank Overdraft.
Following Factors determine capital requirements.
Nature of business, Size of business, Stage of development, Capital invested by the owners, location of that area, Size of business, Stage of development, Time of production, Rate of stock turnover ratio, Buying and selling terms, Seasonal consumption, Seasonal product, profit level, growth and expansion, production cycle, general nature of business, business cycle.