Coopers and Lybrand Ltd :: Papers

Coopers and Lybrand Ltd Coopers and Lybrand Ltd is a private limited company. Finance is needed throughout a company's life. The type and amount of finance required for a business depends on many factors: type of business, success of firm and state of the economy. There are two main types of money that a company needs: Capital expenditure and working capital. Capital expenditure is used for buying fixed assets where a large amount of money but not often purchased. Working capital is day-to-day money required for running the business. These are short-term finance which is usually needed to star t up a business to cover the day-to-day running costs. Long-term capital is used to grow or expand and is paid back over a number of years. There are two main types of finance: Internal and external sources of finance. Internal sources of finance come from the business’s assets and activities e.g. retained profit, sale of assets, reducing stocks and trade credit. External sources of finance come from outside the business e.g. commercial banks, building societies, factoring services, venture capital and leasing and hire purchase. The company ‘Coopers and Lybrand’ can use retained profits as an internal source of finance. Retained profits are when a business had a successful trading year and made a profit after paying all its costs. The business could then use some of that profit to finance future activities .This can be a very useful source of long term finance, as the business is generating profits. Another internal source of finance is sale of assets, where the business sells its assets such as property, machinery, vehicles etc. Sale of assets is usually used as short term finance; however it can be used as long term finance if the asset they sold is very valuable. Coopers and Lybrand are also able to use trade credit. This is when a business normally doesn’t pay for things before they take possession of it. They will place orders for supplies and pay for it after receiving