's Lecture #4-1 - Factors of Production: Capital We will...

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Factors of Production: Capital We will begin our discussion of the economic environment of business by examining how firms and government raise the capital (money) necessary to operate Reference: Lab Manual p7-25 “Overview of the Canadian Financial System” reading This is commonly referred to as the Capital Formation Process
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The Capital Formation Process
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Internal vs. External Financing Two ways in which corporations and governments can obtain capital Internal Financing Corporations: Reinvest profits (retained earnings) Governments: Tax Revenues External Financing When internal sources of capital are insufficient…go to the Capital Markets
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Capital Markets Capital Markets: Definition Places where people or institutions with money to invest (lender/savers) are brought together with those who require capital (borrower/spenders) Capital markets may be actual places Ex. The Toronto Stock Exchange (TSX) Capital markets may also be virtual markets with
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's Lecture #4-1 - Factors of Production: Capital We will...

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