Finnance

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  • Created by: F.W1234
  • Created on: 19-04-18 15:16

Sources of Finnance

1) Retained Profits: Keeping money in the bank to pay dividens.

2) Re-invested Savings: Retained profits the business has will be invested into stocks and shares as a way to get money quickly.

3) Fixed Assets: Raise money by selling fixed assets such as unused buildings.

4) Shares: A limited company can issue more shares to raise money. But more shares will mean less control.

5) Debentures: When the business borrows money from the public, the business pays it back with interest within 25 years.

6) Loans / Morgages: Are repaid with interest, easier for large firms to get loans as they have less risk of failure. They also have more assets the banks can take if the business owes money.

  • Small amounts of money= retained profits, savings.
  • Larger amounts of money= loans, mortgage.

Profit and Loss accounts- shows the performance of the busines annually.

  • Records all indirect costs of running the business. Does not include buying new machinery but does include running them and fixing them. (costs of keeping the business running).
  • Some machinery need to be fixed or part replacements, so the business will set aside an amount of money each year to pay for these things…

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