Different Sources of Finance available to a plc.
Overview of business finance to raising capital
If an existing plc is thinking of expanding -buying some new equipment or machinery, setting up a new plant or branch or buying another business (a takeover or acquisition) etc; it needs money which is called business finance.
This assignment will look at some of the possibilities for business finance. When the company is making a decision through the business finance, it has to been remembered that some sort of finance will be appropriate for some businesses but not for others.
The choice of source of finance that a business makes will depend on a number of factors. These are cost, financial outlook, legal status and time period.
Company needs finance for the short-term or the long/medium-term. The way in which it may raise this finance will differ a great deal and it may look at the different sources and what area of business activity it may be useful for.
Two key sources of finance are internal sources -money which can raise from within the company and includes profit, reducing working capital, sale of assets, perhaps sale and leaseback the assets or better management of existing resources; and external sources -mean raising money from outside the company.
External sources differ as ownership capital and non-ownership capital.