FINANCINGFinancing is the act of providing funds for business activities, making purchases, or investing. It involves raising funds or capital to achieve the necessary objectives. Financing involves sourcing, obtaining and providing funds or goods. Financing occurs at various levels of the economy, starting from small businesses up to multinationals. The process by which companies seek external help from others to enable them to perform their business very well is called financing. Financial institutions and banks are in the business of financing because they provide capital to businesses, consumers and investors to help them achieve their goals. The use of financing is vital in any economic system as it allows businesses and individuals to accompany their objectives with available resources, the financed funds can be used to expand their activities and, in the case of large businesses, they can be used to finance investment projects.CLASSIFICATION OF SOURCES OF FINANCING.The sources of financing of a business can be classified in various ways:(1) Basic classification between debt and equity.(2) Classification of sources of financing based on maturity, i.e. short term, medium and long term sources. Short-term sources are financing sources with a maximum duration of 1 year. Medium-term sources are financing sources lasting between 1 year and 5 years. While long-term sources are financing sources lasting 5 years or more. (3) Classification by financing provider. BASIC FINANCING SOURCES: DEBT VS EQUITY The basic classification of financing sources is the sub-division: debt financing and equity financing. 1. Debt Financing: -Debt financing involves borrowing funds from creditors with the stipulation of repaying the borrowed money...... middle paper...... version.CHARACTERISTIC OF A CONVERTIBLE STOCKThe Convertible feature adds an incentive to investors who hold an interest in purchasing common stock, but want the lower risk associated with preferred stock. This feature allows the holder to convert his preferred shares into a specified number of common shares at a future date.6. NON-CONVERTIBLE PREFERENCE SHARESPreference shares, which are not convertible into equity, are called non-convertible preference shares. These shares may not be converted into equity shares from preferred stock at the shareholder's option. Non-Convertible Share is the opposite of Convertible Share, i.e. unlike convertible shares which can be converted into preference shares at a set date, non-convertible share is not convertible. Holders of non-convertible shares are not entitled to conversion.