1. By the best team
Team members:Grace, Dimitry, Celli,
Alan, tiffany

2. Outline
• Internal sources
• External sources
• Longterm sources
• Shorterm sources

3. Source of
finance
Internal
source
External
source
Ownership
capital
Non-ownership
capital
Long term
source
Short term
source

4. Internal and External Sources
• Internal Sources of Finance
– Come from trading of business
– Day to day cash from sales to customers
– Money loaned from trade suppliers through extended
credit
– Reductions in amount of stock held by business
– Disposal (sale) of any surplus assets no longer
needed (e.g. selling a company car)
• External finance
– Comes from individuals or organisations who do not
trade directly with business
– E.g. banks, investors. government

5. Internal sources
Personal
savings
Retained
profits
Working
capital
Sale of
fixed
assets

6. Ownership
capital
Non-ownership
capital

7. Short and Long-term Finance
• Short term finance
– Needed to cover day to day running of business
– Paid back in a short period of time, so less risky for
lenders
• Long term finance
– Tends to be spent on large projects which will pay
back over a longer period of time
– More risky so lenders tend to ask for some form of
insurance or security if company is unable to repay
loan.
– A mortgage is an example of secured long-term
finance

8. • Short term:finance the business for up
to 1 year
• Medium term: finance the business
for up to 5 years
• Long term:finance the business for
more than 5 years

10. Share
Long
term
source
Debent
ure
Venturd
capital
Bank
loan
mortag
age
Owner
capital
Asset
sales
Rataine
d profit
Internal
accural

11. Bank
overdraf
t
Short
term
sources
Trade
credit
Credit
card
Short
term
bank
loans

12. Internal and external
finance
• Finance can be obtained from
either internal or external sources
– Internal means it comes from within
the business
– External means it is obtained from
outwith the business

13. Reference
http://www.scribd.com/doc/39664871/
Sources-Of-Finance-Ppt-Om