Internal and External Sources of Finance Essay

Internal quotations of pay for TescoTescos main internal source of income entrust be their retained earnings. Retained earnings argon the amount of net income that Tesco have retained and not paid out. Retained earnings ar what are paid to the business owners. Fixed assets are another form of an internal source of finance this form of finance is a lot harder to transpose into cash as fixed assets tend to be things such as vehicles, machinery, buildings and factories.Fixed assets can take a while to convert into cash so Tesco would not rely on them to be a short-term access to finance. Current assets are a key source of finance for Tesco current assets are cash and things that are easy to convert into cash. The things that can be converted into cash easily are things such as well-worn once the stock has been sold earning will be retained by Tesco. Tesco have to ensure current assets are no lower than current liabilities as this may keep them from paying off any possible debts t hey may have.External sources of finance for TescoAs Tesco are a large company some forms of external finance do not apply to them, things such as loans, credit cards and bank overdrafts will be of no interest to Tesco as they are similarly financially significant to benefit from them. However, the sources that do apply to Tesco are investments from shareholders, Tesco have many competitors all competing for the same thing, to be the biggest supermarket within the UK. For Tesco to take that title they will need as much investors as possible. An average loan from the bank would not benefit Tesco as the loan is likely to be small however, if Tesco essential a quick source of finance of a large quantity, things such as a government grants would be beneficial it would be beneficial as the grant is likely to be large.