2.3 Sources of Funds + Business Summaries

Sources of Funds1.Funds? bills needed to establish grow and operate line of argument?it is divided into 2 categories, internal sources such as line pay and external sources such as debt finance2.Internal sources/Equity finance?the money the proprietor has proposed to the business?comes from proprietor?s erectness/retained profits?owner?s equity is the owner?s contribution?retained profits is the money unbroken by the business after it has paid off its taxes3.External sources/Debt finance?money obtained from people other than the owners?it is divided into short decease point/long condition/other sources of cash in handa)Short term borrowings ? debts that leave alone be repaid within a form?overdraft ? an agreement amid a commercial bank and business that whollyows a business?s cheque account to go into a deficit to a limit?bank bill ? patently a indite instruction to repay a agree of money by a certain date. The bank does not provide the money, the investors prov ide the money to the business and the bank is the warranter whom provides security that the money will be repaid. b)Long term borrowings ? debts that will take between 5-25 years to repay?Mortgage ? a secured loan apply to fund the purchase of property. Property cannot be sold until all borrowings ar repaid?Debentures ? finance supplied by the cosmopolitan public for a fixed interest rate. Debentures are pillowcase to government regulationc)Other sources of funds?Leasing ? the payment of money for the use of equipment have by another(prenominal) party.

It is divided into 2 categories, operational lease and fisc al lease. Advantages: no upfront payment, pa! yments are flexible and tax allowable?factorization ? sale of customer debt/accounts receivable to a financier at a discounted rate?Venture capital ? finance supplied by occult investors/venture companies for a risky business that has voltage?Grants ? non-repayable financial benefits supplied by government agencies or private businesses. - financial considerations?Matching principle ? ensure short term assets are matched to... If you want to get a full essay, line of battle it on our website: OrderCustomPaper.com

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