IBDP Business Management Account And Finance Chapter 1 Notes

sources of finance


These notes have specially been curated by expert teachers to simplify and enlighten concepts given in IB Business Management HL. The notes are comprehensive in nature and are sufficient to study the chapter in depth, One need not look for other resources beyond the notes provided on our website which can be accessed for free.

Business management IBDP is a part of group 3 Individuals and the Society of the IB curriculum. The IBDP Business Management course has been devised for imparting knowledge and understanding of different theories of Business Management and application of various tools and methods. It enables the students to analyze and evaluate business activities at all levels- local, national, or international, It also helps in developing holistic understanding of the business environment today which is complex and fast changing.

The subject covers important characteristic of business organization and business functions of human resource management, finance and accounting, marketing, and operations management. The purpose of the course is to help students develop skills that enable them to think critically and make the right decisions after carefully evaluating and analyzing the issue at hand. It also aims at developing the understanding of the importance of innovation and exploring business from different cultural perspectives.

The chapter on Sources of Finance begins with a breakdown of the meaning of the term ‘Finance’ which is the management of money related to the government, organizations or companies including investing, borrowing, lending, etc. Finance is spent on fixed assets like machinery and land or for paying operational costs like rent and salaries.

Sources of finance are further classified based on the source of generation which could be internal- from savings of owners, profits which are generally used to expand the business, sales of assets or external sources like loans, overdrafts, trade credits, subsidies and grants, venture capitalists and Business Angels, etc. Another basic for classification the period which could be short term, medium term, or long term. The chapter further talks about the factors that lead to the choice of sources of finance which are the amount of funds available, the opportunity costs of raising the funds, the amount of the outstanding debts for the business and the time for which the funds are needed.