Unit 2 P4 (PART 2)
FOR NOTES AND GUIDLINE PURPOSES ONLY, COPYING THE
WHOLE DOCUMENT WILL BE COPYWRITE.
USE SENSIBLE.
Internal finance
Internal finance definition: Internal finance is money that comes from within a
company, rather than from external sources. Companies may use internal
finance for investments in lieu of arranging external financing. One advantage to
using internal finance for investments is that the company does not incur
transaction costs such as origination fees and interest, since the money comes
from the inside. Company balance sheets provide information about the amount
of money available through internal finance and other financial matters that
reflect on a company's financial health.
Reference: http://www.wisegeek.com/what-is-internal-finance.htm
External finance
External finance is any way in which a company raises financing other than
using its own money. This most commonly involves issuing equity in the
company, such as selling stocks. It can also include taking out loans. As a
general rule, raising external finance has a higher cost than internal financing.
Reference: http://www.wisegeek.com/what-is-external-finance.htm
Internal finance
Owner’s investment: Money committed or property acquired for
future income.This is money which comes from the owner themselves. It could
be gathered by either wealthyness or starting from scratch and stacking up
money until the person has enough to bring in a decent amount to put into the
business. The advantage for the owner of John Lewis would have been that
whatever they paid in they wouldn’t have had to pay anyone back because they
invested the money in themselves. A disadvantage is that there would have
been a limit to the amount the owner could invest. Going over that amount
would have lent to borrowing money which is not in a position you’d want to be
if starting up a new business.
Sale of stock: Sale of stock is when unsold stock gets sold; this is usually done
at a reduced price as it’s not selling or if there is a big sale. The advantage of
this is that, this is a quick way of raising money for the company. It also makes
way for new ranges to come through as the old ones are getting sold. A
FOR NOTES AND GUIDLINE PURPOSES ONLY, COPYING THE
WHOLE DOCUMENT WILL BE COPYWRITE.
USE SENSIBLE.
Internal finance
Internal finance definition: Internal finance is money that comes from within a
company, rather than from external sources. Companies may use internal
finance for investments in lieu of arranging external financing. One advantage to
using internal finance for investments is that the company does not incur
transaction costs such as origination fees and interest, since the money comes
from the inside. Company balance sheets provide information about the amount
of money available through internal finance and other financial matters that
reflect on a company's financial health.
Reference: http://www.wisegeek.com/what-is-internal-finance.htm
External finance
External finance is any way in which a company raises financing other than
using its own money. This most commonly involves issuing equity in the
company, such as selling stocks. It can also include taking out loans. As a
general rule, raising external finance has a higher cost than internal financing.
Reference: http://www.wisegeek.com/what-is-external-finance.htm
Internal finance
Owner’s investment: Money committed or property acquired for
future income.This is money which comes from the owner themselves. It could
be gathered by either wealthyness or starting from scratch and stacking up
money until the person has enough to bring in a decent amount to put into the
business. The advantage for the owner of John Lewis would have been that
whatever they paid in they wouldn’t have had to pay anyone back because they
invested the money in themselves. A disadvantage is that there would have
been a limit to the amount the owner could invest. Going over that amount
would have lent to borrowing money which is not in a position you’d want to be
if starting up a new business.
Sale of stock: Sale of stock is when unsold stock gets sold; this is usually done
at a reduced price as it’s not selling or if there is a big sale. The advantage of
this is that, this is a quick way of raising money for the company. It also makes
way for new ranges to come through as the old ones are getting sold. A
