SONY CORPORATION

Sony Corporation

Sony Corporation

Task 1.1

It is a bear fact that a business's success is dependant upon the profit it makes and resources available to conduct business and operations. The origin of resources or money is known as sources of funds or finances. There are two acceptable types of finance in business, which are internal and external sources. Internal sources of finance are those options and resources available to the corporation that are inside the organization or within the organization such as capital, and equity. It may take various other forms as well such as cash inflow received from raising equity, making sales, selling equipment, land or part of business, collections received from customers, capital retained from profits for making further investments in business, cash or capital added by the pioneers or originators of the business, which is also known as personal funds, cash received from other entities in form of grants, aid or subsidies, etc. These are the sources that could help in generating funds within the organization (Riley, J., 2012, pp. 1).

The external sources of funds that could be found outside the organization are raising funds via equity or selling shares in the capital market, which is a very common form of raising capital amongst corporations having limited liability and the second most common source of raising funds is done via borrowing from external sources such as banks, private lending agencies and individuals. However, every source of a fund has its distinguished advantages and disadvantages and also the associated costs, which becomes a helping hand in deciding about appropriate source of funds for a corporation (Askwillonline.com, 2011, pp. 1).

Task 1.2

Every source of finance has a set of different implications and adapting a wrong source of fund at right time may result into additional cost or severe losses if not handled appropriately. External sources of funds have its own set of implication such as a loan that comes with a certain fixed cost associated to it which is required to be paid off after a certain time interval. However, it also has certain advantages that a bank cannot recall it before its maturity date. In addition, it may also result in obligating corporations from keeping their assets as a guarantee against a loan. Some lending agencies or banks also charge additional transaction fees for disbursing loans in heavy amount, these fees may include legal costs, commitment fees and insurance etc. Funds raised via equity also have certain advantages and disadvantages. These often take form of stocks, shares or securities or any other financial instrument. A debenture is also one of the means of raising funds from outside sources but there is certain rate of interest associated with it, which is to be paid back in case of converting debentures into shares. However, equity fund is the more safer and cheaper as investor who would invest more has the higher probability of yielding more profit in future time. Equities also possess certain cost in form of dividend or return on investment that ...