Sources of Finance 1

Definitions and different sources of finances, mainly useful for A-level business students

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  • Created by: Lilly
  • Created on: 11-05-10 17:38
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Sources of Finance
Internal sources of finance
Private Limited Company - HHO Ltd
Retained Profits
(Long-Term) Hold back profits - saved each year
after tax, a proportion is given to shareholders as dividends so:
Operating profit
Corporation tax
Dividends distributed to shareholders
Profit left over to put back into business
Working Capital
(Medium-Term)The amount of `liquid' capital needed to carry on a b usiness.
Working capital = current assets - current liabilities
Selling off fixed assets
(Short-Term) Selling off property to raise money- if the business is struggling it can sell
off fixed assets that it no longer needs.
The company may stop providing a service or certain goods and therefore can sell those

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Medium-Term) A contract renting land, buildings, etc., to another; for a specified period
of time.…read more


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