Financial sources - Chapter 1 - Financial sources...

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International Business – 6th Financial sources
Business sources * The financing of your business is the most fundamental aspect of its management. * Get the financing right and you will have a healthy business, positive cash flows and ultimately a profitable enterprise. * The financing can happen at any stage of a business’s development. * On commencement of your enterprise you will need finance to start up and, later on, finance to expand.
Different sources * Finance can be obtained from many different sources. * Some are more obvious and well-known than others. * The following are just some of the means of finance that are open to you and with which we can help:
Internal sources * This is the finance or capital which is generated internally by the business unlike finances such as loan which is externally arranged from banks or financial institutions. * The internal source of finance is retained profits, the sale of assets and reduction / controlling of working capital.
Retained Profits / Retained Earnings * Retained profits / earnings are called the internal source of finance for a business for the simple reason that they are the end product of running a business. * The phenomenon is also known as ‘Ploughing Back of Profits’. Retained profits can be defined as the profit left after paying a dividend to the shareholders or drawings by the capital owners.

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