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Anglicky v odbornch pedmtech"Support of teaching technical subjects in EnglishTutorial:Business Academy

Topic: Business financing

Prepared by:Ing. Marcela Zlatnkov

Projekt Anglicky v odbornch pedmtech, CZ.1.07/1.3.09/04.0002je spolufinancovn Evropskm socilnm fondem a sttnm rozpotem esk republiky.

Business financing is acquisition and spending of financial resources.

It takes place at:a/ setting up a businessb/ ordinary course of a businessc/ expansion of a business and its activitiesd/ dissolution of a businessBusiness financing

2Depending on who it belongs to:Personal OtherDepending on how long they are available in the business:Long-termShort-termDepending on where they come from:InternalExternalAs shown in the companys balance sheet:BalanceNon-balanceDivision of financial funds

It consists in getting money from investors and its spending on equipment of the business by means of long-term and circulating propertyLong-term and circulating property should be financed from long-term funds, especially from basic capitalBasic capital is formed by financial and material contributions of proprietors (partners, shareholders, members).Part of the property may be financed from other funds, such as bank loanIn this case, bank examines the business plan of the company and will require financial security of the loan by the companys propertyFinancing when starting up a business

In the ordinary course of business circulating material performs cycle. Fixed assets and human labour are also involved in this cycle. It is connecetd to circulation of money too.Financing ordinary course of business rests in getting money from sales or short-term loans and its spending on the purchase of material and services, recovery investments, payment of wages, payment of taxes, payment of interests, repayment of loans, payment of dividendsIf the company reaches profit, it gets more money on ordinary activity than it must spendFinancing ordinary course of business

The company may be expanded by:Actual developing investments (in long-term property, increase of stock)Financial assets (buying stocks and shares of other companies)It is long-term assets which should be financed from long-term funds. These funds may include:Non-split profit from previous yearsOther proprietors contributionsBond issueLong-term bank loansFinancing to expand business

Businesses as legal persons are usually cancelled by voluntary decision of the competent authority of the company, or by courtIt is cancelled either with or without liquidationLiquidation is the process of liquidation of the business estate . Special financial statement is elaborated, liquidator is appointed and he or she gradually sells business property, pays its obligations and looks into liquidation balance.Financing business when liquidating means getting money by selling business property, its use to cover its liabilities and payment of shares on liquidation balanceFinancing at business dissolution

The company can provide its long-term solvency:If long-term assets are financed from long-term sourcesIf it makes profitIf it observes a certain ratio between own and foreign capital, that means it will not exceed certain level of indebtednessIt also depends on these variables how quickly the company can expand so that it does not endanger its solvencyEnsuring the solvency of the company

1/ State which sources of the company cannot be used to finance business

2/ Describe the course of issue, sale and paying of bonds

3/ Describe the statutory authorities of different types of companies

4/Name some short-term sources of the companyTasks:

Biovec, K. Pehled uiva k maturitn zkouce z ekonomiky. Fortuna, 2004. ISBN 80-7168-747-2. varcov Jena, ing a kolektiv, Ekonomie, strun pehled. Ing. Jena varcov, Ph.D., CEED nakladatelstv a vydavatelstv, 2006. ISBN 80-903433-3-3.Klnsk Petr, Munch Otto, Ekonomika pro obchodn akademie a ostatn stedn koly 1-4. Fortuna, 2003, ISBN 80-7168-862-2.

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