Unit 2: Business Resources
By Rais Mauthoor
Money, Money, Money
Introduction
Firstly, this report will describe sources of internal and external finance for a selected
business and interpret the contents of a trading and profit and loss account and balance
sheet for a selected company. Afterwards, this report will illustrate the use of budgets as
a means of exercising financial control of a selected company and illustrate the financial
state of a given business. The report will then interpret the contents of a trading and
profit and loss account and balance sheet for a selected company explaining how
accounting ratios can be used to monitor the financial performance of the organisation.
This report will then analyse the reasons why costs need to be controlled to budget and
evaluate the adequacy of accounting ratios as a means of monitoring the state of the
business in a selected organisation, using examples. Finally, this report will evaluate the
problems they have identified from unmonitored costs and budgets.
P4 Describe sources of internal and external finance for a
selected business
Internal sources
The internal sources of finance originate from within an organisation like Tesco. It is
recommended for small businesses (which does not include Tesco) to find internal
sources of finance to fund their businesses because it is less risky.
Owner’s savings
The owner’s savings or personal savings are the money that Tesco owns themselves
that could potentially be used to develop their business. This is especially useful for
small businesses, but it still beneficial for huge corporations such as Tesco since
personal savings usually prove as a good alternative to external sources like bank loans
and overdrafts.
Capital from profits
Capital from profits can be used to reinvest in Tesco, which is basically the method of
using Tesco’s profits to expand on their business further, for example if Tesco gained
more money from selling fruits and vegetables than anticipated, it can then use that
profit to fund and further enhance the business.
External sources
Unlike internal sources of finance, external sources of finance come from outside of the
company, this could be from the bank, family loans, commercial mortgage etc.
Banks
By Rais Mauthoor
Money, Money, Money
Introduction
Firstly, this report will describe sources of internal and external finance for a selected
business and interpret the contents of a trading and profit and loss account and balance
sheet for a selected company. Afterwards, this report will illustrate the use of budgets as
a means of exercising financial control of a selected company and illustrate the financial
state of a given business. The report will then interpret the contents of a trading and
profit and loss account and balance sheet for a selected company explaining how
accounting ratios can be used to monitor the financial performance of the organisation.
This report will then analyse the reasons why costs need to be controlled to budget and
evaluate the adequacy of accounting ratios as a means of monitoring the state of the
business in a selected organisation, using examples. Finally, this report will evaluate the
problems they have identified from unmonitored costs and budgets.
P4 Describe sources of internal and external finance for a
selected business
Internal sources
The internal sources of finance originate from within an organisation like Tesco. It is
recommended for small businesses (which does not include Tesco) to find internal
sources of finance to fund their businesses because it is less risky.
Owner’s savings
The owner’s savings or personal savings are the money that Tesco owns themselves
that could potentially be used to develop their business. This is especially useful for
small businesses, but it still beneficial for huge corporations such as Tesco since
personal savings usually prove as a good alternative to external sources like bank loans
and overdrafts.
Capital from profits
Capital from profits can be used to reinvest in Tesco, which is basically the method of
using Tesco’s profits to expand on their business further, for example if Tesco gained
more money from selling fruits and vegetables than anticipated, it can then use that
profit to fund and further enhance the business.
External sources
Unlike internal sources of finance, external sources of finance come from outside of the
company, this could be from the bank, family loans, commercial mortgage etc.
Banks
