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Profits retained in the busines
Internal soures in busines
if a company is profitably, some of these profits will be taken in tax by the goverment and some is nearly alwys paid out two the owners or share holders. if any profits remain .it is kept in the bussnes and this retaind profits become a souurce of finance for future activities. clearly a newly formed company or one treding at a loss will not have acces to his source of finance . for others companies retaind profits are a very significant source of founds for expansion-see again the coca-cola situtaion in setting the scene case study above. once invested back into the business these retaind profits will not be paid out of the shareholders so they represent a permanent source of finance.
SALES OF ASSETS- Established companies often find that they have assets that are no longer fully engaged. these could be sold to raise cash.in addition some businesses will sell assets that they still intend to use but which they do not need to own .in these cases the assets might be sold to a leasing specialist and leased back by the company .this will be raise capital -but there will be an additions fixed cost in the leasing and rental payment. in 2008 AIG insurance company planned to sell of some of its subsidiaries to raise case to help the company through difficult times for exmple the sale of one of the largest aircarft leasing companies internationl lease finance could raise several billion dollers .in the previous yers, HSBC sold itshuge london heds. quarters for rs.2 billon but will stey in the building and lease it back from the new owners at the annual rent of rs.80 million.
if a company is profitably, some of these profits will be taken in tax by the goverment and some is nearly alwys paid out two the owners or share holders. if any profits remain .it is kept in the bussnes and this retaind profits become a souurce of finance for future activities. clearly a newly formed company or one treding at a loss will not have acces to his source of finance . for others companies retaind profits are a very significant source of founds for expansion-see again the coca-cola situtaion in setting the scene case study above. once invested back into the business these retaind profits will not be paid out of the shareholders so they represent a permanent source of finace
14 Oct, 2018
NIMS offers a diverse and vibrant community where students can not only excel academically but also grow personally through engaging experiences and supportive networks. Help other students by share your experiences at NIMS.