If you have read my last three articles, the term financial resources were used frequently. This term became an issue for Bola, but the lecturer has requested that she research on her own. So, she stumbled upon some materials that will help her understand the term and gives ten examples of financial resources.
Financial resources defined
They are money or near money items used by individuals, businesses, and the government to meet their daily and yearly needs. Without them, a business cannot operate in the first instance.
Financial resources are important business resources. It is said that they are the lifeline of a business. But not only for businesses. Individuals, families and the government need them too.
You can see it as anything you can use to pay debts, and meet daily expenses like paying for t-fare and buying food items for you and your family. You can also see it as money you lend to a friend that he or she promises to pay back another day. Or that you have borrowed from a bank that you are using to meet some important needs.
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Financial resources are also called financial assets. Generally, it is expected that these resources should be used to generate revenue for a business either actively or passively. Active ones generate income directly.
For example, generators used by a printing press aid the publishing of books that are sold to earn revenue. However, the official car of the chief executive officer of the printing press is not generating income directly but does so passively. So with investing excess money in a mutual fund. Here, the mutual fund will earn interest that increases the bottom line of the entity.
In government, financial resources are used to meet recurrent and capital expenditures. They are obtained from taxes, fines, treasury bills, Eurobonds, federal government bonds, and government-controlled businesses and investments.
Examples of financial resources
The ten examples of financial resources used in individuals, businesses, and government are:
- Cash in hand
- Cash at the bank(s)
- A loan from friends and family
- Working capital loans
- Short and long term loans from banks
- Financing from trade creditors
- Treasury bills
- Commercial papers
- Corporate and government bonds
- Equity capital
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Final words
Finally, financial resources are those resources that are used to generate income for businesses and the government. They are also used to pay expenses and for capital projects. Examples of them are listed above.