internal financing


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Internal Financing

Finance that does not come from issuing stocks or bonds but rather from the company's retained earnings and/or depreciation. One may think of internal finance as a company's savings account that it may use to buy assets when it needs.

internal financing

The financing of asset purchases with funds generated in the usual course of operations rather than funds that are borrowed or raised from the issuance of stock.

internal financing

the ability to finance a firm's growth from retained earnings. A company's NET PROFIT can be paid out in DIVIDENDS or retained for internal financing, or some mixture of these two. Generally, shareholders look for some immediate income in the form of dividends and some growth in the capital value of their shares (which depends on growth of the company). By paying out more dividends, growth is slowed. Achieving the optimum solution between two conflicting objectives is an important area of study in FINANCIAL MANAGEMENT. See COST OF CAPITAL, RETENTION RATIO, RESERVES.

internal financing

the ability to finance a firm's growth from retained earnings. A company's NET PROFIT can be paid out in DIVIDENDS or retained for internal financing, or some mixture of these two. Generally, shareholders look for some immediate income in the form of dividends and some growth in the capital value of their shares (which depends on growth). By paying out more dividends, growth is slowed. Achieving the optimum solution between two conflicting objectives is an important area of study in managerial finance. See COST OF CAPITAL, RESERVES.
References in periodicals archive ?
Through deposit banking activities, the bank will also increase the flexibility of Siemens internal financing operations and optimize risk management.
Jiang said that internal financing will be the bank's primary tool to increase its capital.
Alternatively, a corporation can establish an 80/20 company as an internal financing entity that lends funds to other members of the unitary group.
Whether you develop an internal financing program or partner with a finance company, helping your customers finance their equipment purchases is a good investment in short-term sales and long-term customer relationships.
The subsidiaries in ADP were organized to serve an internal financing function and were not holding companies.