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BUSINESS FINANCE

Sources of Finance Internal 1. 2. 3. 4. 5. Retained profits Depreciation term Revenues / Capital Loan Working Capital Capital Sale of fixed assets Share / Equity Capital 3. Grants & Aids Subsides Loan Capital Leasing Mortgages Long term bank loans Debentures Venture Capital Share / Equity Capital 1. Ordinary shares 2. Preference shares - Cumulative - Non Cumulative External

Short term 1. Bank Overdraft 2. Trade Credit 3. Factoring of debts

medium term 1. Leasing 2. Hire Purchase 3. Medium term Bank loans

Long 1.

2.

1. 2. 3. 4. 5.

1. 2. 3. 4. 5.

Factors influencing choice of finance Time period for which finance is required. Amount required. In case of large amounts the combinated of two sources of finance may be needed. The risk involved in the project. Gearing ratio which helps to decide between loans capital and share capital. The size of the business. Sole traders usually only have internal short term external sources available.

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