2.3 Sources of Funds + Business Summaries

Sources of Funds1.Funds? bills needed to establish grow and operate line of conclude?it is divided into 2 categories, internal sources such as melodic phrase pay and external sources such as debt pay2.Internal sources/Equity pay?the money the proprietor has proposed to the business?comes from possessor?s rightfulness/retained profits?owner?s equity is the owner?s contribution?retained profits is the money unplowed 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 hold on point/long bourne/other sources of cash in handa)Short term borrowings ? debts that ordain be repaid within a twelvemonth?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 ? solely a indite instruction to repay a trade union of money by a certain date. The bank does not provide the money, the investo rs provide the money to the business and the bank is the surety 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 public public for a fixed interest rate. Debentures are field of force to government regulationc)Other sources of funds?Leasing ? the payment of money for the use of equipment possess by another(prenominal) party.

It is divided into 2 categories, operational lease and monetary lease. Advantages: no upfront pay! ment, payments are flexible and tax allowable?factorization ? sale of customer debt/accounts receivable to a operate at a discounted rate?Venture capital ? finance supplied by underground 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, fix up it on our website: OrderCustomPaper.com

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