Various sources of Finance available to a Public Limited Company

Businesses essentially need finance for the short-term and the long-term. The way in which they may raise these funds will differ a great deal and in this section we start to look at the different sources and what area of business activity they may be useful for.
Two key sources of finance are internal sources and external sources. 'Internal sources' refers to money they can raise from within the firm. This may include profit, or perhaps better management of existing resources. External sources means raising money from outside the firm. In many cases this will mean turning to the banks, but it may also be that the firm tries to issue more shares on the stock market or perhaps sells debentures to raise money.

Sources of Finance
This resource is designed for use with Accounting courses at A' level. This resource is relevant to the following:
  * AQA Module 5, Section 14.5: 'Types of Business Organisation, Sources of Finance'
  * OCR Module 2505, Sections 5.3.2 and 5.6.2
For many businesses, the issue about where to get funds from for starting up, development and expansion can be crucial for the success of the business. It is important, therefore, that you understand the various sources of finance open to a business and are able to assess how appropriate these sources are in relation to the needs of the business. The latter point regarding 'assessment' is particularly important at A2 level where you are expected to make judgements.
Internal Sources
Traditionally, the major sources of finance for a limited company were internal sources:
  * Personal savings
  * Retained profit
  * Working capital
  * Sale of assets
External Sources
Ownership Capital
In this context, 'owners' refers to those people/institutions who are shareholders. Sole traders and partnerships do not have shareholders - the individual or the partners are the owners of the business but do not hold...