 The next source of long term capital is retained earning or plowing back of profit. So plowing back of profit is an important source of internal finance for a company. So what we mean by retained earning or plowing back of profit refers to the process of retaining a part of the company's net profit for the purpose of reinvesting it in the business itself. In other words, the savings generated internally by a company in the form of retained earning are plowed back into the company for diversification of its business. Or retained earning are part of equity which is sacrificed by the equity shareholders. Retained earnings are the best and the cheapest source of finance for the business. For using retained earning as capital, a business does not have to depend on outsiders. For using retained earning as capital, a business does not have to depend on outsiders and it strengthened the position of a business. So there are certain merits of using retained earning as a source of long term capital. Like number one is it's readily available. So retained earning is already in the hands of company. Just the company need to use it as capital. So when a company is having sufficient retained earnings does not have to depend on outsiders to meet the long term financial requirement. And being an internal source, it is easily available for a firm. Next is less expensive. Since it is internally available, there is no flotation cost, there is no brokerage cost, there is no underwriters commission. So the cost of raising funds is reduced. Now the next is no dilution of control. So since retained earning is an internal source of finance, so it eliminates the fear of ownership dilution and loss control by the existing shareholders. The next is no surge on assets. So using retained earning as capital do not create any surge over the assets of the company. So assets remain free. Now there are certain limitations. So what is the limitation? The availability is limited since it is a reserve made out of profit. So it depends on the profit. So this limits the availability of funds to be used as retained earning or as applying back of profit. Next dissatisfaction among the investors. So excessive retained earning means adoption of conservative dividend policy. Because if the company need to reserve a part of profit, then this will definitely reduce the dividend of the shareholders. And the company need to adopt a conservative dividend policy. So this may create some dissatisfaction among the shareholders. The next long term source of capital used by the companies is Devenser. So a Devenser is an acknowledgement of a debt by a company usually issued under a common seal. A Devenser holder is a creditor of the company and a fixed rate of interest is paid to the Devenser holders. And the interest on Devenser is a surge on the profit and loss account of the company. Devenser holders are their creditors, they are not the owner of the company. So by issuing Devenser's company can raise long term fund. So there are certain merits of issuing Devenser's. Number one is fixed rate of interest, unlike equity shares, Devenser's carry fixed rate of interest, which is both for the company as well as for the Devenser holders. Devenser holders are assured of getting fixed income. And for the company also the amount of interest to be paid to the Devenser holder remain fixed. Unlike the equity shareholders, Devenser holders cannot claim more interest in case the company earn good profit. Then no dilution of control since Devenser holders are not owner, they are just creditor of the company. So issue of Devenser never dilute the controlling power of the equity shareholders. And they cannot take part in the management of the company and they don't have putting right. The next advantage is tax benefit. Interest paid on Devenser is tax free. Hence it is one of the cheapest source of long term capital for any company. Then trading on equity, Devenser's enable the company to take advantage of trading on equity. It helps in maximizing return on equity shareholders and wealth maximization of the equity shareholders. Then flexibility. Use of Devenser's bring flexibility to the capital structure of the company as they can be redeemed after a certain period of time. Then there are certain demerits of issuing Devenser's. Like issue of Devenser is a permanent burden. Since payment of interest to the Devenser holder is fixed, so it put a real burden over the company. And particularly when the income of the company is low, it become very risky or the burden become very risky. Then weaken the credit worthiness. When a company use excessive Devenser for raising fund, this weakens the credit worthiness of the company. And it restricts the capacity of the company of further borrowing. Then surge over asset. So when company issue Devenser, it create surge over the asset of the company. Which again weakens the borrowing powers of the company. The next source of raising long term fund is Tram Loan. That is Tram Loan provided by various financial institutions. Tram Loan may be of two type. One is short term loan, another is long term loan. Loan raised for a period ranging from 1 year to 5 years are called short term loan. And loan raised for a period above 5 years are called long term loan. So this Tram Loans are long term debt for a company raised for long term investment. Like expansion, diversification and modernization etc. So in India there are several financial institutions established by the central government as well as state government. For providing financial and technical assistance to the business and industrial houses. The main objective of such institutions is to provide medium term and long term capital to the industrial enterprises and business houses. Some of them are like industrial finance corporation of India, then industrial development bank of India, then industrial credit and investment corporation of India. Then there are SFCs in the estate level etc. So this is all about sources of long term fund. Now I will discuss some source of or methods of raising medium term or short term fund. So one of the methods of raising medium or short term fund is loan from commercial banks. Commercial banks are the most important and easy source of providing short term capital to the business houses. They constitute the major portion of working capital loans. They are given under security of tangible and readily marketable securities. They provide a wide variety of loan tailored to meet the specific requirements of the business houses. The main form in which commercial banks provide short term finance to business enterprise are loan, cash credit, overdraft, bill discounting etc. Then the next source is public deposit. So in case of public deposit, general public are invited to deposit their savings with the company. Here a company can obtain fund directly from the public. At the time of accepting deposit, the company issue a receipt mentioning the amount of deposit, the date of accepting the deposit, the rate of interest to be offered and the date of repayment etc. As compared to banks, companies offer higher rate of interest on public deposit. On the other hand, for companies public deposit is cheaper than loan from commercial banks. And in recent time, public deposit has become a popular means of raising short term fund. Then there are some other sources like indigenous bankers, then the depreciation fund, then the trade credit, government loans and assistance and customers advance. So who is indigenous banker? Indigenous bankers are private moneylenders and other country bankers who provide short term finance and charge higher rate of interest. However, with the advancement or with the development of commercial banks and other financial institutions, the dominance of indigenous bankers is reducing. And these days company prefer to go to bank instead of indigenous bankers. But in case of emergency, some small business houses go for indigenous bankers. Then the depreciation fund. So depreciation fund is created out of profit of the company, provide a good service of short term capital, provided they are not invested in or represented by an asset. Then trade credit. Trade credit refers to the credit extended by the suppliers to the buyers. So under this agreement, credit is not granted in cash. The goods are sold on credit. The usual duration of trade credit varies from 15 days to 19 days. It is granted to those customers who have sound financial standing, good deal and reputation. So this is also one good source of short term credit. Then government loans and assistance. Nowadays government both central and state provides business finance to industries in the form of loan for the development of industries. Preferably some small scale industries and some key industries are getting loan at concessional rate of interest. Further financial assistance is also provided to industries of national importance in whose development the government is interested. Then customers advance. So nowadays lending and reported industries whose products are in good demand such as Tata steel, Maruti car, Baza Zoto, etc. get advance from their customers and the agents against order received from them. So it is also a source of good source of short term finance which involve no cost. Customers advance. So what happened nowadays? The reputed companies who has very dominance in the market who are having good will in the market. So they take advance from their customers and agents against the order received from their customers. So this is a very important source of short term fund for those companies. And this is very cheap also because the company did not pay any interest on that advance received. So big companies like Tata, like Maruti, like Baza's, Hero, all these companies are using these techniques of getting short term fund. So this is all about various sources of short term and long term fund. For further reference you can use the books on financial management by Prasanna Sandra and you can have a good idea about financial management. Thank you.