3.1 to 3.2.

Capital Revenue
expenditure expenditure
Day-to-day operational
“investment”. large sum of
costs of a company.
money to purchase fixed
If business cannot pay for
assets (propertys with
this, it will go out of
value). They can later resell
it or will get long-term profit.
business(insolvency).
EXAMPLE: EXAMPLE:
factories, delivery trucks, utility bills
technology, permanent paying wages and
brand image,.. suppliers
taxes and debts

Internal sources of finance

money that they have already earned. so it isn’t repaid.

Personal funds Sale of assets

owner’s money
Retained profits
net money left after
distributing all the money in
the end of the year. Those
savings are a primary source
for new investments
Sell items of value that belong
to business to generate
income. Asset can be
tangible(land) or intangible
(patent). Appropiate when
changing strategy or updating
tech.
There is cost of opportunity
due to losing all future possible
revenue from the assets.

short-term sources medium-term sources long-term sources

<1 year 1 to 5 years longer to ∞
External sources of finance
money that they have already earned. so it isn’t repaid.

Equity finance Business angel

wealthy person invests in company
Provider receives part and helps it develop from its starts.
ownership ofcompany. Venture capital
Share capital company invests their clients
Raised in stock market. Company money for them to later sell at
becomes publicly-held through IPO. higher stake. they promote
Investors usually recieve dividends. new business growth

Loan capital
Debt finance Used for fixed assets. Can ask for collateral
in case it isn’t repaid. ex: mortgage of
Money borrowed from bank factory.
that must be repaid with Trade credit
interest rate. Business receives goods but
pays supplier at later date.
Microfinance/Microcredit
Small loans to poor people for their small Overdraft
business. Doesn’t require collateral. Usually Short-term loan in which bank
given to community so they help each account holder withdraws more
other return loan. Promotes financial money than they have to later
independence repay it with high interest rate.