Revenue and capital expenditure Essay Example | Topics and Well Written Essays - 1250 words

Revenue and capital expenditure - Essay ExampleInternal Sources of financeFunds are generated in two ship canal - 1. generating remuneration and retaining them in the business. 2. By selling some of his assets. Only successful business can retain the profit. It is very difficult to decide how much profit should retain and how much should distribute. Retaining a large proportion of profit requires a long-term view. Retained profit is the most important acknowledgment of finance for subtile as well as large-scale business.Sale of Asset -If the buckram has no other way to arrange funds from any source, then reluctantly the firm sells a particular division or a subsidiary business. Sale asset is a quite normal part of the business. Sometimes the firm buys another firm with the intention of raising finance by selling off its assets. This is known as asset stripping.External Source of FinanceThis source is divided into two parts, first is short term funds and second is long term funds. persistent-term funds are very useful for refreshing business but all types of businesses need capital planning. Long-term funds are of two types -1. Share Capital 2. Loan CapitalShares are the proof of ownership. Each shareholder has a share in the business. Shares can be sold at a profit. If a company wants to arrange a flock of funds through the share, it can offer the shares for sale to outsiders. When the private company issuesLoan CapitalLong term loans are part of the capital of the business. Long term loans come in forms of mortgages, long-term bank loans, venture capital, and debenture.