• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Research on sources of finance in a business

Extracts from this document...

Introduction

Research on the Sources of Finance for a Business Firms sometimes need to raise finance for Working Capital and Capital Expenditure. Explain what each is and give examples. Working Capital (or Revenue Expenditure) The working capital is made up of the current assets net of the current liabilities. It is vital to a business to have sufficient working capital to meet all its requirements. Many businesses have gone under, not because they were unprofitable, but because they suffered from shortages of working capital. Capital Expenditure is used for buying fixed assets where large sums of money are involved but they are not purchased often e.g. new premises. List and explain factors that determine how much and what type of finance a business might need. � Size of the Business. � Type of the Business. � Where the business is in terms of its development. ...read more.

Middle

Sale of Assets An established business has assets. These can be sold to raise cash. The business loses the asset but has the use of the cash. It makes good business sense for businesses to dispose of redundant assets. They can finance development without extra borrowing. If the asset is needed, it may be possible to sell it, but immediately lease it back. In this way, the business has use of the cash and the asset. This is known as the sale and leaseback. External Finance Overdraft Overdrafts tend to be more flexible and do not carry the same various requirements of security of a loan. Overdrafts are more suited for day to day expenses incurred through running the business. It is not suitable for capital expenditure or to cover start-up costs for any length of time. When a business has problems with cash flow an overdraft would help to keep the cash flowing Bank loan The bank can ...read more.

Conclusion

Venture Capital A company is suitable for venture capital investment if it exhibits high growth prospects, has a product or service with a competitive edge or unique selling point and has a strong management team. To this the person will have to value the business, and will then have to look for investors. Grants All publicly funded schemes are designed to encourage new and growing businesses to bring wealth and ultimately create jobs. To help achieve this government make available a portion of the taxpayer's money to help and encourage enterprise. This cash gets distributed through a variety of ministries, departments and agencies on a national and local, most businesses are eligible at any one time to apply for a number of different grants and support which in are distributed in a wide variety of forms. Factoring Factoring is a flexible form of loan, which advances money to a company as it issues new invoices. This is different to overdrafts or more formal loans, which are usually for a fixed amount. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Accounting & Finance section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Accounting & Finance essays

  1. Marked by a teacher

    Business Finance. There are a number of sources of finance, which businesses will need ...

    3 star(s)

    bankrupt will find it difficult to pay back the money which had been borrowed and will then be in debt. If the business is then in debt they will have to find a way to pay back the bank, if they are unable to pay the debt they will then

  2. Complete Report on Askari Commercial Bank

    Now customer becomes creditor of bank. It is most important department of bank and bank officers must take special care before opening the account. The accounts offered by the ACBL are of two types: 1. Account Of General Customers * Minor account * Illiterate person account * Joint Account 2.

  1. The Purpose of Keeping Accurate Accounts

    8. Lower costs and salaries: there is less need for extra trained staff. 9. Database queries: the database can be queried directly or via a reporting tool, for example Crystal reports. For example all customers' profit which is less than 10% can be clearly identified and separated.

  2. This report has been produced as evidence for Unit 9 - 'Financial Services' - ...

    30.00 30.00 30.00 30.00 30.00 30.00 Car insurance(Paul) 55.00 55.00 55.00 55.00 55.00 55.00 Pension 87.5 87.5 87.5 87.5 87.5 87.5 Dental insurance 30.00 30.00 30.00 30.00 30.00 30.00 Home content insurance 18.00 18.00 18.00 18.00 18.00 18.00 Car loan 240.00 240.00 240.00 240.00 240.00 240.00 Building insurance 25.00 25.00 25.00 25.00 25.00 25.00 Council Tax 70 70

  1. What does Finance involve.

    Fixed costs are definite and they do not depend upon how much turnover occurs in your business. 3. VARIABLE COSTS - Variable costs are the costs which keep vary they are described as costs which are always different (opposite of fixed costs).

  2. Exploring business purposes

    The scale of the business is local. Cheney School is in the public sector which means that it is owned by the government for the benefit of everyone. The purpose of the business is to provide a service. Task Two I am now going to prepare a newspaper article using the B-TEC book for help to describing the primary, secondary and tertiary business activities.

  1. Investment Portfolio - Shares and other investments

    46 0.81% 25-Feb-08 18.03 0.53 3.03% 5699.8 55.3 0.98% 22-Feb-08 17.5 0.74 4.42% 5644.5 -18.5 -0.33% 21-Feb-08 16.76 1.43 9.33% 5663 85.7 1.54% 20-Feb-08 15.33 -0.99 -6.07% 5577.3 -111.3 -1.96% 19-Feb-08 16.32 0.12 0.74% 5688.6 54.6 0.97% 18-Feb-08 16.2 -1.04 -6.03% 5634 -45.8 -0.81% 15-Feb-08 17.24 -0.31 -1.77% 5679.8 -68.4

  2. Planning the finance for my new business.

    A loan includes borrowing an amount of money to be paid back over a period of time, this benefits a business because the money is easily accessible to be immediately used in the business, however the money borrowed has to be paid back with interest, the interest rates can rise

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work