Sources of Business Finance — OCM STD 11 Commerce — Question
Gujarat BoardEnglish MediumSTD 11 CommerceOCMSources of Business Finance3 Marks
Question
Explain the importance of finance.
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Answer
Finance is such an axis around which all economic activities move. Business capital is compared to the blood in human body.
If there is no enough blood in body, it has to face many diseases. In the same way if there is no sufficient capital in business, it has to suffer many financial problems.
$(1)$ Timely payment cannot be made to creditor which is harmful to the prestige of a company.
$(2)$ As raw material cannot be purchased, continuity of manufacturing is not maintained.
$(3)$ Wages and salary cannot be paid at proper time which create dissatisfaction among workers.
$(4)$ Cash discount advantage cannot be taken while purchasing material.
$(5)$ Sometimes opportunities of profit cannot be taken. It is essential to have sufficient capital in business.
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