Sources of Finance

Limited company is an organisation in which allow you set up and run your business. Any profits which are made within a limited company stays within the company after it has paid corporation tax, which then allows the company to share its profits.

control over the company. Also, as we discussed in the cash option, share price will

Capital can come from state and corporate pension funds, public and private endowments and personal investors

Finance. In order to finance our startup year, we issued stocks and borrowed loan to finance our operation and for safety in case the sales did not go well. Financing using stocks means that we are selling common or preferred stocks to individuals. In return for the money, they get some ownership over the company and its interest. This helps to bring public’s awareness about the company. If the sales suffice, we will pay the debt in the second round.

Longevity/Continuity- Company will likely die off if owner does. The company, being one and the same as the owner, cannot continue without measures being taken to pass on

When a company decides to pay dividends, it has to be careful on how much it will be given to the shareholders. It is of no use to pay shareholders dividends

Banks are not the only financial intermediary from which corporations can obtain financing. What are the other intermediaries? How much financing do they supply, relative to banks, in the United Kingdom, Germany, and Japan?

Dividends should be made cumulative and issuable upon a liquidation event or an IPO. Such dividends may be converted, if the holder desires, to common shares. This will encourage management to seek a quicker exit.

A private limited company is owned privately by a small group of people such as a family. They are not allowed to offer shares (in the company) to the general public and can operate through just one director. A private limited company cannot trade its shares on the stock market.

There are several factors that guide the choice among debt financing and equity financing such as potential profitability, financial risk and voting control. Equity financing is a method used to obtain capital in order to finance operations, growth or expansion. Sources of equity financing are extremely important. Major sources of equity financial are Retained Earnings, sale of stock, and funds provided by venture capital firms. Profits that are kept and reinvested are called Retained earnings, which is a very attractive source fund due to the savings it provides to the entity by not paying the interests, dividends or underwriting fees related to issuing securities. This source of financing does not dilute ownership, but it

Financing is a process of providing additional capital by investor or financial institution to the strapped for money entrepreneurs for companies’ needs such as inventory or equipment purchase, advertising campaign, development, etc. If truth be told, alternative

In practice, dividend policy will be affected by taxes as tax rates for different categories of investors will differ. Also, a firm’s dividend policy is perceived by the financial markets to be a signaling mechanism. A cut back in dividends may signify that the firm perceives tough

The fact that shareholders are taxed twice through this repayment methodology infers that dividends are not their repayment technique of choice. Furthermore, paying out cash reserves through dividends also has the effect of both reducing the company’s assets and also inhibited the company’s ability to fund future growth as Dividends reduce the company’s retained earnings.

Raising Capital it one of the most important thing in any business. It's useless having a great idea and the right connections if you don't have the money to get it going. Without capital, your business can't get off the ground. You need it to buy products or materials, pay wages, have a secure cash flow and generally run your business on a day-to-day basis. The most common types of debt capital are bank loans, personal loans, bonds and credit card debt. When looking to grow, a company can raise funds by applying for a new loan or opening a line of credit. This type of funding is referred to as debt capital as it involves borrowing money under a contracted agreement to repay the funds at a later date. With the possible exception of

Sources of finance refers to the ways of gathering various financial sources to meet the financial needs of the business. Furthermore, it states exactly how the companies are gathering and allocating finance to satisfy the requirements of the firm (Chandra, 2011). Firm either belong to existing or new categories that would need a varied amount of finance to meet the long and short term requirements such as construction, inventory, fixed assets and operating expenses (Hally, 2007).