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Raw materials are procured as part of the day-to-day operations of the business and hence working
capital is used to purchase the raw materials.

Classification of the sources of finance based on the duration:

Based on the duration, the sources of finance are classified as follows:

1. Long term finance: Capital financed for more than 5 years. This includes

a. Debentures

b. Equity Shares

c. Issue of right shares

d. Leasing

e. Loans from financial and industrial institutions

2. Medium term finance: Capital financed for a duration of more than one year and below 5 years.
This includes

a. Commercial banks

b. Debentures

c. Loans from Specialized finance institutions

3. Short term finance: Capital financed for a duration of less than one year. This includes

a. Advance from customers

b. Bank overdraft

c. Cash Credit

d. Discounting bills

e. Finance against bill of lading

f. Installment credit

g. Trade creditor open book account

Sources of finance available for a public limited company

The following are the sources of finance available for a public limited company.