Investigating The Suitability Of Different Sources Of Finance

Decent Essays
3.0 Investigate the suitability of different sources of finance to facilitate Par Foods Ltd.’s short term objectives.

3.1 Sources of finance
There are two main sources of finance that Pars food LTD could consider as options to keep the company viable and moving forward. These are internal and external sources. Internal sources include selling assets, wages and retained profit. The external sources can be long and short term. Long term sources are owner investments and debentures. Whereas short term sources of finance can be things such as overdrafts, trade credits or leasing. (Business Finance Guide, n.d.).
3.2 Applying financial sources to Pars’ short term objectives
Pars Food have many short term goals and they will need new funding in most of these. This is due to them only being in a satisfactory position and having a low net profit. The poor state of the company means that internal sources of finance should be kept to a minimum as they don’t have enough of their own money to put back into the business and they also don’t want to be selling assets as they would like to be buying new ones. This means they will have to use external sources of finance whether they be long term or short term.
For Pars’ short term objectives that could be achieved from new sources of finance a bank loan would seem to be the way to go to purchase the Twister cutting machine that will cost £300,000. “A bank loans money to a business based on the value of the business and its perceived ability
Get Access