Major areas of finance Opportunities
1. Investment Prospects:
With the right major areas of financing, companies can invest in new projects, which help expand their business and increase profits. Through this the organization can survive in the competitive market and enter new markets.
Example: A restaurant chain wants to open their new branch. By raising the necessary financing for this, they are able to grow their market.
2. Risk Reduction:
Funding for organizations can create opportunities to reduce risk. It is possible to spread the risk of the organization by raising money from different sources. As a result, the effects of market fluctuations are protected through financing.
Example: A company raises equity funds in addition to bank loans, so as to reduce credit risk and share reduced profits with shareholders during economic downturns.
three major areas of finance 3 major areas of finance
3. Financial Stability:
It is possible to ensure the financial stability of the organization through proper financing. It helps the organization to operate effectively in the long run and acquire the required resources.
opportunities and major areas of finance department
Example: A manufacturing business collect money for long-term financing to purchase new machinery, it’s increasing their production efficiency and makes them more financially stable.
4. Cash Flow Management:
Financing technique can fix out the cash flow problem of an organization. It especially aiding in day-to-day operations and cash flow challenges using short-term financing.
Example: A retail business may obtain short-term borrowing from a bank to cover its peak season inventory needs; a company may take out additional funds to perform its operations when needed.
what are the major areas of finance
1. Long-term Financing:
Long-term financing is financing that is generally required for a period of more than five years. These are usually for big projects or investments which take time. These consist of new share and bond issues, as well as long-term bank loans.
Example: A major manufacturing plant can represent a long-term financing need that the company might be able to meet by issuing bonds.
2. Short-term Financing:
Short term finance is a method of raising needed funds for less than a year, to balance the working capital. It is normally to be used for day-to-day activities, i.e., purchase of raw materials, payment of salaries and many others,
Example: An organization may take overdraft facility from bank to fulfill its running capital requirements.
3. Medium Term Financing:
Financing that is required for a period of three to five years is called medium-term financing. It is mainly used for purchase of machinery, modernization, or business expansion.
Example: A business can take a mid-term loan to upgrade their machineries, so that they can increase production capacity.