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

Sources of Finance

Extracts from this document...

Introduction

Sources of finance This assignment will look at the different sources of finance that are available to a small business or a big company. With each source of finance listed the report will assess the implications that can arise and along with this the report will look at the cost to the business to taking a certain source of finance. All businesses need short-term finance from the very beginning to start up the business and to cover day-to-day running costs. This provides the business with working capital. However businesses also need long-term capital to help them to grow and expand, and this is paid back over a number of years. ...read more.

Middle

Companies often sell off assets such as premises or any other equipment. Overdrafts An overdraft allows a business to withdraw more money from its current bank account than it contains, up to a certain limit agreed previously with the bank manager. Bank loans These are the main external sources of finance, they are usually fixed amount for any period of time from 1- 20 years. Regular payments of the sum borrowed plus interest will have to be paid. Their asset will require collateral (security) just in case the owner cannot make repayments back to the bank so their property will be taken away. Interest payments can be calculated using this formula: Amount borrowed X percentage rate = amount of interest For example if you borrowed a �2000 for a year at an interest rate of 6%, the interest would be �60 (�1000/100*6 = �60). ...read more.

Conclusion

Some local Council also give financial assistance to firms that new job in their area. Selling shares Private companies cannot sell shares to the public but they can sell to friends and families. PLC will have a benefit of this as they can raise large amounts of capital and invest what they have in the company. Going public If a medium sized company wants to raise greater amounts of money for expansion, it could go public, or become a PLC. However it is very expensive to set up a PLC though. Debentures Money is lent to a PLC for a fixed period of time at a fixed rate of interest. At the end, the money must be repaid. Interest will have to be paid even if the firm does not make a profit. ...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)

    A bank loan can provide much needed funds for a borrower. These advantages take a big effect from the loan. Disadvantages The Disadvantage is that when people borrow too much money, they get trapped by their debt. Some loans have a down payment penalty, which prevents the borrower from paying the money off before without incurring extra cost.

  2. In this assignment I am opening a tuck shop in the school grounds and ...

    we are doing in the business and checking how much money is coming in to a business and coming out of the business and to have a smooth running of the business. To check the accuracy of the cash flow forecast you need to check it by using a formula

  1. Investigating Richer Sounds PLC.

    areas work together to achieve the aims and objectives of Richer Sounds, the objective is: Open between four and six stores in the current year. 4 5Richer Sounds have a suggestion scheme. Every member of staff has a suggestion pad and their Chairman, Julian Richer, reads every single suggestion.

  2. Comsat case

    * Strengths of the DCF method: this model is forward-looking and recognizes the time-value of money. This is also the most company-specific method. * Weaknesses of the DCF method: growth rates used are speculative and subjective. It is only applicable to companies that pay dividends.

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

    News Corp, for instance, usually only pays a low dividend. Recommendations for services I would recommend Paul and Anna to check all the prices on internet before choosing their provider for insurances and mortgage and for the loan. By researching the prices can save Paul and Anna a lot of money.

  2. Free essay

    planning personal finances

    He has several sources of income. Till he has to go university he plans to work in McDonald's full time and earns �250 a week before tax. He knows that he must try and save as much as possible. During term time at university he plans to work 15 hours in a bar earning �4.50 an hour before tax.

  1. Complete Report on Askari Commercial Bank

    Our mobile ATMs are the first in Pakistan. Inspiring ethical values: Integrity is the most valued standard in whatever we do. We understand that our commitment to satisfy customers' needs must be fulfilled within a professional and ethical framework. We subscribe to a culture of high ethical standards, based on the development of right attitudes.

  2. Financial Analysis of Matalan PLC

    mostly tangible and hence recognised in the financial statements, it has less preference for companies with a preponderance of intangible assets not so recognised e.g. for accountancy and consultancy firms. Return on Investment Ratio: This explains the generation of earnings to share price.

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