FINANCIAL MANAGEMENT

Financial Management

Financial Management

Task 1

You are required to carry out research into different sources of finance (Internal and External sources of finance) available to J. Brown Ltd that will enable the company to expand its operation successfully.

The sources of Finance which can be used by the J. Brown is regards with financing their venture, can be divvied into two main categories; internal sources and external sources of finance. Small businesses need money. They need money in the short term to pay their bills and pay their staff, but they also need money in the long term to be able to invest and develop business. Businesses need funding for projects in the short term and long term. How they can raise funds differ greatly, and in this section we'll Listed in the different sources of funding. Two main sources of funding are businesses. These are the internal sources and external sources. Internal sources refer to the money they can raise in the company. It may be profit, or perhaps better management of existing resources. External sources are fundraising outside the company. In many cases, this means turning to banks, but it is also possible that the small company trying to sell or issue shares to partners or investors to raise funds. Internal sources of financing available to small businesses, but they may be more limited for large projects. The company may be forced to turn to banks or other institutions (external sources) to help raise funds.

Domestic financing is to use the financial resources, the sources of which are formed during the financial and economic activities of the organization. Examples of such sources can serve as net income, depreciation, accounts payable, accrued liabilities and payments, deferred revenue. When external financing used funds coming into the organization from the outside world. Sources of external funding may be founders, citizens, government, financial and lending institutions, non-financial institutions. Grouping of financial resources of the sources of their formation is shown in the figure below. The financial resources of the organization as opposed to material and labor and exposure to different interchangeability of inflation and devaluation. At present challenge for the domestic industry is the state of fixed assets, depreciation of which reached 70%. This involves not only the physical but also the moral deterioration. The sources of funds are as follows:

Internal sources of the company (net income, depreciation, sale or lease of unused assets).

Borrowed funds (foreign investment).

Loans (loans, leases, bills).

Mixed (complex, combined) financing.

Domestic sources of financing

In modern conditions, the company independently distributes profits retained in their possession. Rational use of profit takes into consideration factors such as the implementation of plans for further development of the company, as well as the interests of owners, investors and employees. As a rule, the larger the profit goes to the expansion of economic activity, the less the need for additional funding. Retained earnings depend on the profitability of business operations, as well as adopted by the company's dividend policy. The advantages of the internal financing businesses are the ...