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Every business enterprise, whether big, medium or small, needs capital to carry on its operations smoothly and to achieve its targets.

Finance is the life blood of business. No business can run successfully without adequate finance.

The term ‘capitalization’ is used in quantitative aspect and refers to the amount at which a company’s business can he valued.

The term working capital is commonly used for the amount required for holding current assets like stock of raw material and finished goods, bills receivable, debtors and cash and also to meet the day to day expenses like salareis and wages, rent, taxes etc.

Before approaching the capital market to collect finance, it is essential to determine or estimate the capital requirements of the company.

The financial management has to take three important decision viz. (i) Investment decision i.e., where to invest fund and in what amount, (ii) Financing decision i.e., from where to raise funds and in what amount, and (iii) Dividend i.e., how much to pay dividend and how much to retain for future expansion.

As we know finance is the lifeblood of every business, its management requires special attention.

Traditionally, the role of commercial banks in providing long-term finance to industries in India has been very negligible.

Besides the issue of shares- equity and preference and debentures, a company can accept deposits from the public to finance its medium and short-term requirements of funds.

Convertible debentures are those debentures which can be converted into specified number of equity shares of the company after the expiry of a specified period at the option of the holder of such debentures.

Equity shares and debentures are the two most common types of securities issued by a company for raising long-term funds.

Debentures are creditor ship securities representing long-term indebtedness of a company. A debenture is an instrument executed by the company under its common seal acknowledging indebtedness to some person or persons to secure the sum advanced.

Raising capital by issue of shares is a most important method of raising long-term funds. Those funds can be invested in long-term or permanent assets like land and building, plant and machinery, furniture etc.

Equity shares or ordinary shares are those shares which are not preference shares. Dividend on these shares is paid after the fixed rate of dividend has been paid on preference shares.

Every company requires funds for investment in business. In a business, funds are required to purchase various fixed assets such as land and buildings, machinery, furniture etc and for meeting the day to day requirements of the business such as for purchasing raw-materials, paying salaries and wages and incurring expenses.

Environment in general, means the sum total of all physical and social conditions that influence individuals or community.