forms of finance
INTRODUCTION
Companies need to choose from among various sources of finance depending on the amount of capital required and the term for which it is needed. Finance sources can be divided into three categories, namely traditional sources, ownership capital and non-ownership capital. Traditional sources are the internally generated capital (retained earnings); ownership capital is the capital owned by shareholders of the company (ordinary shares) while non-ownership capital includes funds from lenders such as banks and creditors. In view of this report, it is exclusively focused on external financing which is ownership and non-ownership capital.
Long term sources of finance are those that are needed over a longer period of time, usually over a year. The reasons for needing long term finance are generally different to those relating to short term. The major reason for sourcing for long term finance for companies is to be able to carry out its capital intensive projects which in the long run cannot or may not be adequately funded by its retained profits. Most important aspects of any investment from the perspective of both the investor and company are to be able to minimize risk and maximize profit.
Investment bankers and corporate finance specialists assist firms in identifying financial needs, evaluating capital structure models and finding interested investors.
Analysis of Key Differences between Gravier Plc And Expo Plc
Gravier plc is a public limited liability with an annual turnover of £200million and requires new finance in the total sum of £50million in order to be able to produce using a new plant, materials for road building. Thus, for it to be able to produce these materials, new plants and machinery will be required.
On the other hand, Expo plc has an annual turnover of £5million and has a public service customer and requires a new finance worth £8million to relocate from its existing research laboratory to a new
Companies need to choose from among various sources of finance depending on the amount of capital required and the term for which it is needed. Finance sources can be divided into three categories, namely traditional sources, ownership capital and non-ownership capital. Traditional sources are the internally generated capital (retained earnings); ownership capital is the capital owned by shareholders of the company (ordinary shares) while non-ownership capital includes funds from lenders such as banks and creditors. In view of this report, it is exclusively focused on external financing which is ownership and non-ownership capital.
Long term sources of finance are those that are needed over a longer period of time, usually over a year. The reasons for needing long term finance are generally different to those relating to short term. The major reason for sourcing for long term finance for companies is to be able to carry out its capital intensive projects which in the long run cannot or may not be adequately funded by its retained profits. Most important aspects of any investment from the perspective of both the investor and company are to be able to minimize risk and maximize profit.
Investment bankers and corporate finance specialists assist firms in identifying financial needs, evaluating capital structure models and finding interested investors.
Analysis of Key Differences between Gravier Plc And Expo Plc
Gravier plc is a public limited liability with an annual turnover of £200million and requires new finance in the total sum of £50million in order to be able to produce using a new plant, materials for road building. Thus, for it to be able to produce these materials, new plants and machinery will be required.
On the other hand, Expo plc has an annual turnover of £5million and has a public service customer and requires a new finance worth £8million to relocate from its existing research laboratory to a new
References: Arnold, Glen (2013). Corporate Financial Management (5th Edition) Harlow, England: Pearson. Wishwoode, B. (2012). Project Financing. Available: http://www.investopedia.com/articles/. Last accessed 9th November, 2013.