Finance For Business Expansion.

A business faces three major issues when selecting an appropriate source of pay for a new project (Jay 2003):

1. Can the pay be brocaded from internal resources or will new finance have to be raised outside the business?

2. If finance needs to be raised externally, should it be debt or legality?

3. If external debt or lawfulness is to be used, where should it be raised from and in which form?

EQUITY FINANCE.

There ar two main sources of equity finance:

* Internally generated funds

* Share Issues

1. INTERNALLY GENERATED FUNDS

Internally generated funds make retained earnings (i.e. undistributed profits attributable to workaday tractholders) plus non-cash charges against profits (e.g. depreciation).

For an established company, internally generated funds provide represent the single most important source of finance for both short and long-term purposes.

Internally generated funds are a cheap and immediate source of finance. However, it is essential that the companys dividend policy is taken into account when determining how much of each years earnings to be retain (Foulks Lynch 2002).

2. SHARE ISSUES

These are a mixed bag of military issue new shares according to the circumstances of the company and these hold:

a) Public Issue: Also known as base on balls by Prospectus or Initial Public put forwardings (IPOs).



Shares are sold directly to the creation, usually with the advice of a Merchant Bank.

b) Offer for change: The company sells the shares to an issuing house which then sells the shares to the public (thereby saving the company some work as the issuing house takes responsibility for the paperwork - but for a charge). Most share issues use this approach.

c) Sales by Tender: A mood around the pricing problem is to make an offer for Sale by Tender. A minimum reserve price is perplex and subscribers are invited...

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