Internal and External Sources of Finance
Internal Sources
Personal Savings
A lot of businesses mostly often use the personal savings option when owners feel the business is considered small and the savings are available to use to help the company if needs be. Practically Tesco depend a lot on their savings as a source of finance to help them improve as a business.
Retained Profits
The retained profits are money that has already been made and set aside securely for a company like Tesco to reinvest into the company for beneficial reasons. Tesco could use the money marketing and advertising reasons, vehicle upgrades or technology improvements. For example Tesco could use the money to invest in advertising schemes to attract more customers showing how much cheaper it is to shop at Tesco compared to their competitors. Another could be that updating technology, which could be in the stores to upgrade the older version of self-servicing machines to make it an easier and quicker process for customers.
Working Capital
The working capital is used for a short-term basis and reserved for day to day expenses. The money is mainly used for stationery, salaries, rent, bills and invoice payments.
Sales of Assets
Sales of assets are surplus fixed assets for example buildings and vehicles for a business like Tesco that they might sell to generate more money into the company and invest into new areas. These decisions that organisation make to sell items that have been used or are still being used might affect the amount of existing products or services that Tesco provide.
External Sources
Shares
Tesco are one of the many limited companies in the world who look to sell additional shares to new or existing shareholders that are going to make a better investment for the future of the business. This process will be in exchange for the return of their investment and have the