Internal Trade: Wholesale and Retail

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What is the term used for the exchange of goods in business within a country's boundaries?

Domestic trade

Which category of internal trade involves the purchase and sale of goods and services in large quantities for resale and intermediate use?

Wholesale trade

What crucial tasks do wholesalers perform in the distribution of goods and services?

Product grading and storage

What utility do wholesalers provide by placing goods in a location and time when they are required for consumption or use?

Time utility

Which service do wholesalers provide to manufacturers by facilitating large-scale production?

Order aggregation services

What is the term used for the purchase and sale of goods and services between different countries?

International trade

What is one of the main functions of wholesalers mentioned in the text?

Purchasing goods in bulk and storing them

How do wholesalers help in the marketing function, as mentioned in the text?

By advising producers about customer preferences

What is the benefit of storage provided by wholesalers, as mentioned in the text?

Reducing the burden of storage on retailers

What role do wholesalers play in providing services to retailers, as mentioned in the text?

Granting credit to frequent customers

What is one of the risks that retailers can avoid by using the services of a wholesaler, as mentioned in the text?

Risk of price drops and theft

What is the main role of retailers in the distribution of goods, as mentioned in the text?

Selling goods directly to end consumers

What role do wholesalers play in facilitating production continuity, as mentioned in the text?

Storing goods until demanded by retailers and consumers

What is one way in which wholesalers reduce the retailer’s work, as mentioned in the text?

By reducing product inventory for retailers

What is a benefit provided by wholesalers to retailers with regards to grant of credit, as mentioned in the text?

Allowing better management of retailer's business

What service do wholesalers provide to reduce risk for retailers as per the text?

Sharing risk of storage, theft, and market demand fluctuations

What is the primary characteristic of equity shares as a source of finance?

Claim over residual income

Which type of finance is considered as the 'blood for the Body of business'?

Owner's fund

What is the primary role of equity shareholders in a company?

Bearing primary risk

Which characteristic makes equity shares a source of permanent capital for a company?

Claim over residual income

What distinguishes equity shares from preference shares as a source of finance?

Claim over residual income

What gives equity shareholders the ability to influence decision-making in a company?

Claim over residual income

What is the main feature of preference shares as mentioned in the text?

Fixed rate of return

Which source of business finance is described as a hybrid security with preferential right of repayment?

Preference shares

What is the characteristic feature of retained earnings as a source of business finance?

Permanent source of fund

In the context of trade credit, what determines the volume and period of credit allowed?

Volume of purchase and financial position of the purchaser

What distinguishes public deposits as a source of business finance from bank deposits?

Higher interest rate

What is the defining characteristic of debentures as a source of borrower's fund?

Fixed rate of interest

What role does a trustee play when large numbers of debentures are sold to the general public?

Ensuring repayment by the company

What is a distinguishing feature of commercial banks in the context of sources of borrower's fund?

Short-term finance

What sets apart inter corporate deposits (ICD) as a source of business finance?

Intra-company lending

What is a characteristic feature of debentures as a source of borrower's fund?

Repayment on demand by holder

Study Notes

Internal Trade

  • Internal trade refers to the exchange of goods within a country's boundaries.
  • Wholesaling is a category of internal trade that involves the purchase and sale of goods and services in large quantities for resale and intermediate use.

Role of Wholesalers

  • Wholesalers perform crucial tasks in the distribution of goods and services, such as breaking bulk, making goods available at the right time and place, and providing storage facilities.
  • Wholesalers provide the utility of place and time by making goods available when and where they are required for consumption or use.
  • Wholesalers facilitate large-scale production by enabling manufacturers to produce goods on a large scale, thereby reducing costs.

International Trade

  • International trade refers to the purchase and sale of goods and services between different countries.

Wholesalers' Functions

  • Wholesalers help in the marketing function by facilitating large-scale production, breaking bulk, and providing storage facilities.
  • Wholesalers provide the service of storage, which reduces the retailer's workload.
  • Wholesalers help retailers by providing goods in the required quantities, thereby reducing the retailer's risk.
  • Wholesalers play a crucial role in providing services to retailers, including the provision of credit and reduction of risk.

Retailers' Role

  • The main role of retailers is to make goods available to the ultimate consumers.

Wholesalers' Benefits

  • Wholesalers provide the benefit of storage, which reduces the retailer's workload.
  • Wholesalers play a crucial role in facilitating production continuity by ensuring a steady supply of goods to retailers.
  • Wholesalers reduce the retailer's work by performing tasks such as breaking bulk and providing storage facilities.
  • Wholesalers provide the service of granting credit to retailers.
  • Wholesalers reduce the retailer's risk by providing goods in the required quantities.

Finance

  • Equity shares are a source of permanent capital for a company, with the primary characteristic of being a source of long-term finance.
  • Equity shareholders have the ability to influence decision-making in a company.
  • Equity shares are distinguished from preference shares in that they do not have a fixed rate of dividend.

Preference Shares

  • Preference shares have a fixed rate of dividend and are considered a hybrid security with preferential right of repayment.

Debentures

  • Debentures are a source of borrower's fund, with a fixed rate of interest and a fixed repayment period.
  • A trustee plays a crucial role in managing large numbers of debentures sold to the general public.

Trade Credit

  • The volume and period of credit allowed in trade credit are determined by the buyer's creditworthiness and the supplier's credit policy.

Public Deposits

  • Public deposits are a source of business finance that is distinguished from bank deposits in that they are raised directly from the public.

Inter Corporate Deposits (ICD)

  • ICDs are a source of business finance that is characterized by deposits made by one company with another company.

Commercial Banks

  • Commercial banks are a source of borrower's fund, with the distinguishing feature of providing short-term loans.

Retained Earnings

  • Retained earnings are a source of business finance that is characterized by the company's retained profits.

Learn about the exchange of goods within a country's boundaries, known as internal trade. Explore the categories of internal trade, including wholesale trade and retail trade, and understand the formalities involved in these transactions.

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