The firm has multiple choices of sources of financing.

Answer: The statement is justified.

A company needs funds for fixed capital and working capital, for short, medium and long periods. Many sources are available, and the company chooses a mix depending on cost, risk, control and the period for which funds are needed.

• Owned funds: equity shares, preference shares and retained earnings (ploughing back of profits).
• Borrowed funds: debentures/bonds, public deposits, loans from banks and financial institutions.
• Short-term sources: trade credit, bank overdraft and cash credit, discounting of bills, commercial paper.
• Foreign sources: External Commercial Borrowings, ADR/GDR, Foreign Direct Investment.

Each source has merits and limits; for example equity gives permanent capital without fixed burden but dilutes control, while debt is cheaper and tax-deductible but increases risk. Therefore the firm has multiple choices and selects the best combination for its capital structure.