What is business finance? Why do businesses need funds? Explain.


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Nature of Business Finance: 

1. Fixed capital requirements:

In order to start a business funds are needed to purchase fixed assets like land and building, plant and machinery. This is called fixed capital requirement. 

2. Working Capital requirements: 

A business needs funds for its day to day operation. This is known as working Capital requirements. Working capital is required for purchase of raw materials, to pay salaries, wages, rent and taxes.

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