To: Clair Catherall
From: Mohammed Uzair
Date: 07/09/15
Subject: Sources of Finance
Internal
Retained Profit can be defined as the amount of money that is left over when the all the overhead
and costs of business have been deducted. Retained profit could be used by a business to pay
shareholders as a dividend or to invest in new equipment such as a new state of the art tandoori
oven to make the business more efficient. This is a good source of finance for Curry Lounge to use as
it is there for them to use and they don’t need to go to the bank or any other organisation to borrow
money /loan which can be a lengthy process as they will be looking at the financial side of the
business to see whether they would be able to pay the loan back. Also by using profit they won’t
owe any interest to the bank.
Personal Savings can be defined as the amount of personal money that the owner himself puts
into the business. Personal savings could be used by a business to pay staff their wages or to reinvest
into the business to revamp the décor or front house of the restaurant. This is a good source of
finance for Curry Lounge to use because like the previous source; it is there for them to use and they
don’t need to go to the bank or any other organisation to borrow money /loan which can be a
lengthy process as they will be looking at the financial side of the business to see whether they
would be able to pay the loan back. The owner of the Curry Lounge can use his own money in
whichever way he chooses and doesn’t need to get anybody’s approval.
Sales of Assets can be defined as the amount of money that come from the sale of stock or assets
that belong to the business. Sales of assets could be used by a business to replace his kitchen
equipment or to pay for wages of new staff that Raz may hire for his business; The Curry Lounge.
He could do this by selling assets such as the big chandelier that he has in the middle of the
restaurant which is part of the décor or any old kitchen equipment. This is a good source of finance
for Curry Lounge to use as it will make space available within his restaurant that he can use for other
purposes such as storing stock or produce. Also, he will be paid for the sale of his assets so he will be
getting quick money that he can use on the running of his business or invest in a new piece of
kitchen equipment.
External
Shareholders can be defined as people who have bought a share/stake within the business.
Shareholders may be used by a business like Curry Lounge to invest in new produce or stock for the
business like new food products such as meat and rice or flour, they could also be used to invest in
new tables or chairs for the restaurant, the amount would just depend on how many shares they
sold. This is a good source of finance for Curry Lounge to use as they would not have to get a bank
loan and so would not have to pay interest back. The shareholders could also then help the owner
with the running of the restaurant.
From: Mohammed Uzair
Date: 07/09/15
Subject: Sources of Finance
Internal
Retained Profit can be defined as the amount of money that is left over when the all the overhead
and costs of business have been deducted. Retained profit could be used by a business to pay
shareholders as a dividend or to invest in new equipment such as a new state of the art tandoori
oven to make the business more efficient. This is a good source of finance for Curry Lounge to use as
it is there for them to use and they don’t need to go to the bank or any other organisation to borrow
money /loan which can be a lengthy process as they will be looking at the financial side of the
business to see whether they would be able to pay the loan back. Also by using profit they won’t
owe any interest to the bank.
Personal Savings can be defined as the amount of personal money that the owner himself puts
into the business. Personal savings could be used by a business to pay staff their wages or to reinvest
into the business to revamp the décor or front house of the restaurant. This is a good source of
finance for Curry Lounge to use because like the previous source; it is there for them to use and they
don’t need to go to the bank or any other organisation to borrow money /loan which can be a
lengthy process as they will be looking at the financial side of the business to see whether they
would be able to pay the loan back. The owner of the Curry Lounge can use his own money in
whichever way he chooses and doesn’t need to get anybody’s approval.
Sales of Assets can be defined as the amount of money that come from the sale of stock or assets
that belong to the business. Sales of assets could be used by a business to replace his kitchen
equipment or to pay for wages of new staff that Raz may hire for his business; The Curry Lounge.
He could do this by selling assets such as the big chandelier that he has in the middle of the
restaurant which is part of the décor or any old kitchen equipment. This is a good source of finance
for Curry Lounge to use as it will make space available within his restaurant that he can use for other
purposes such as storing stock or produce. Also, he will be paid for the sale of his assets so he will be
getting quick money that he can use on the running of his business or invest in a new piece of
kitchen equipment.
External
Shareholders can be defined as people who have bought a share/stake within the business.
Shareholders may be used by a business like Curry Lounge to invest in new produce or stock for the
business like new food products such as meat and rice or flour, they could also be used to invest in
new tables or chairs for the restaurant, the amount would just depend on how many shares they
sold. This is a good source of finance for Curry Lounge to use as they would not have to get a bank
loan and so would not have to pay interest back. The shareholders could also then help the owner
with the running of the restaurant.
