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FINANCE (Capital (Working capital (To operate day by day (pay…

- - - - Company sell asset that they no longer use or need to raise cash for financing
    - - company sells equipment that has loan outstanding to lease company(lease back the equipment with cheaper price)
      - Raising cash by reducing cash outlays
    - - Profit is kept by business after taxes and dividend are paid(new companies and loss not have access)
      - Financing permanent(not paid back)
    - - Debt to asset ratio is 1 : 1
    - - Benefits
        
        No shares are sold to otheers
        
        No direct cost
      - Drawbacks
        
        new/unprofitable coompanies have few assets to sell in order to raise cash
        
        growth constained by limited cash resources
  - - - Delaying payment of vendors
      - Early payment discount cannot be taken
      - Suppliers not happy if late payment
    - - selling account receivable at a discount to collector
    - - pre arrange with banking/lending institution
      - expensive with high rates
      - Most flexible
      - used day to day basis to cover cash needs