Sources of Finance

What are Sources of Finance There are three different sources of finance, Short Term, Long Term and Medium Term. The most popular way of attaining funds for a business is through equity (money flowing into the business) with over 39% of businesses using this method, examples of this would be retained profit or capital from shares. Short Term (30 days or less) Medium Term (less than 6 months) Long Term (6 months+) Sale of assets, selling business assets, such as product stock or vehicles. Overdrafts Lease-Back, Selling company property, then leasing it back. similar to rent to own, however the business owned… Continue reading Sources of Finance

Liquidity Ratios

There are different ratios that are used in business. A current ratio is a formula that shows the relationship between what the business has payable, and what they have as liquidity. It may be easier to think of current liability as current payables. Formulas for Liquidity Ratios The formula for the current ratio is Current assets / current liabilities = current ratio The current ratio shows if the company has enough potential cash to pay any debts that they owe. The current ratio is usually based off of a year and should be above or between 1-1.25, below this number… Continue reading Liquidity Ratios