Business Finance
✏️ In one line
Business finance is the money a business needs to start, run and grow.
📖 Story time
- Kabir needs ₹5 lakh for machines. Money for long-lasting things like this is fixed capital.
- He also needs ₹1 lakh every month for steel and salaries. That day-to-day money is working capital.
- He can use owner's funds (his savings, or selling shares) or borrowed funds (a bank loan, debentures).
- Borrowed money must be repaid with interest. Owner's funds don't have to be repaid.
🎯 Your turn
Sort each source: owner's funds or borrowed funds?
Drag each card into a box, or tap a card and then a box.
Nice! Well sorted! Owner's funds come from the owners; borrowed funds must be paid back.
Not quite. Hint: If it has to be repaid, it's borrowed.
Money used to buy a new machine is…
Nice! Correct! A machine is used for many years, so it needs fixed capital.
Not quite. Hint: Is the machine used up in a month, or kept for years?
Interest on a bank loan must be paid even if the business makes a loss.
Nice! True. That's the risk of borrowing: interest is due no matter what.
Not quite. Hint: Does the bank care if Kabir had a bad month?
Kabir: Kabir needs money but doesn't want to give anyone a share of ownership in BottleBuddy.
Which source fits best?
Nice! Yes! Lenders get interest, not ownership. Kabir stays the owner.
Not quite. Hint: Shares and partners both mean sharing ownership.
🎉 Topic done!
You cracked Business Finance. That's all of Business Studies for now!
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