Sources of Finance
Introduction - Sources of Finance
Introduction to the Sources of Finance resource.
Sources of Finance
Introduction
This resource is designed for use with Accounting courses at A ' level. This resource is relevant to the following: * AQA Module 5, Section 14.5: 'Types of Business Organisation, Sources of Finance ' * OCR Module 2505, Sections 5.3.2 and 5.6.2
For many businesses, the issue about where to get funds from for starting up, development and expansion can be crucial for the success of the business. It is important, therefore, that you understand the various sources of finance open to a business and are able to assess how appropriate these sources are in relation to the needs of the business. The latter point regarding 'assessment ' is particularly important at A2 level where you are expected to make judgements.
Internal Sources
Traditionally, the major sources of finance for a limited company were internal sources: * Personal savings * Retained profit * Working capital * Sale of assets
External Sources
Ownership Capital
In this context, 'owners ' refers to those people/institutions who are shareholders. Sole traders and partnerships do not have shareholders - the individual or the partners are the owners of the business but do not hold shares. Shares are units of investment in a limited company, whether it be a public or private limited company. Shares are generally broken down into two categories: * Ordinary shares * Preference shares
Non-Ownership Capital
Whilst the following sources of finance are important, they are not classed as Ownership Capital - Debenture holders are not shareholders, nor are banks who lend money or creditors. Only shareholders are owners of the company. * Debentures * Other loans * Overdraft facilities * Hire purchase * Lines of credit from creditors * Financial structures of four well known British companies * Grants * Venture capital
Introduction to the Sources of Finance resource.
Sources of Finance
Introduction
This resource is designed for use with Accounting courses at A ' level. This resource is relevant to the following: * AQA Module 5, Section 14.5: 'Types of Business Organisation, Sources of Finance ' * OCR Module 2505, Sections 5.3.2 and 5.6.2
For many businesses, the issue about where to get funds from for starting up, development and expansion can be crucial for the success of the business. It is important, therefore, that you understand the various sources of finance open to a business and are able to assess how appropriate these sources are in relation to the needs of the business. The latter point regarding 'assessment ' is particularly important at A2 level where you are expected to make judgements.
Internal Sources
Traditionally, the major sources of finance for a limited company were internal sources: * Personal savings * Retained profit * Working capital * Sale of assets
External Sources
Ownership Capital
In this context, 'owners ' refers to those people/institutions who are shareholders. Sole traders and partnerships do not have shareholders - the individual or the partners are the owners of the business but do not hold shares. Shares are units of investment in a limited company, whether it be a public or private limited company. Shares are generally broken down into two categories: * Ordinary shares * Preference shares
Non-Ownership Capital
Whilst the following sources of finance are important, they are not classed as Ownership Capital - Debenture holders are not shareholders, nor are banks who lend money or creditors. Only shareholders are owners of the company. * Debentures * Other loans * Overdraft facilities * Hire purchase * Lines of credit from creditors * Financial structures of four well known British companies * Grants * Venture capital