Credit cards – credit cars are commonly used to obtain materials, services and fuel needs of the business. When a credit card is being used there is no exchange of cash. At the end of the month credit card users will receive a statement which states all transactions been made and the amount owed.
If the payments are made within 25 days then there will be no interest but if is past the payment period then there will be high interest rates to be paid back.Long-Term and Short-Term Finance for Morrisons For balance sheet refer to Appendix For Profit and Loss Account refer to Appendix Morrisons uses both long-term and short-term finance. This can be seen by looking at the balance sheet of the company. Short-term sources for Morrisons There are some short-term sources which Morrisons use at the moment which helps to cover fluctuations in their cash flow.
One of the sources they use is leasing. This relates to a contract between a lessor and lessee for hire of an asset. The lessor has the ownerships of the assets. The lessee has possession of the asset on payment of specified lease rentals over a period. Morrisons balance sheet shows the figures of 227.9m for leasing.
This is the amount which this business uses for its leasing purposes.Another short-term source is creditors. Creditors form part of a business’s liabilities and represent amounts due to third parties. Creditors are analysed in the balance sheet into those due within one year and those due after more than one year.
For most businesses, the main creditor is “trade creditors” – amounts owed to providers of goods and services on credit terms to the business. The figure for creditors show 501.1m in the balance sheet of Morrisons. The main creditor for Morrisons is similar to other businesses. The creditor is trade creditor. The amount for trade credit is 5m as on balance sheet of this business.There are no bank loans or overdrafts in the balance sheet. Long-term sources for Morrisons Long-term finance is being used by Morrisons.
Some of the sources of long-term finance are: The Long term share Morissons uses is Ordinary shares. They have ordinary shares because the share price fluctuates with trade on stock exchange. Morissons sells shares on stock exchange and from this the business earns a capital of 267.7m.Retained profit is another source of long-term finance for this company.
Retained profits are those profits that have not been paid out as dividends to shareholders, but retained for future investment by the company. The figure on the balance sheet for retained profit is ï¿½1,039.5m for Morrisons.Some Other Financial Uses for Morrisons Morrisons as a business also invest their some of their funds in property. The balance sheet confirms the figures of 240.5m under the name of investment. In the balance sheet of Morrisons there is also a figure which is for merger reserve.
The amount is stated as 2.578.3m. In the balance sheet there is also a part which is named as ‘other financial assets’ and this is 19.1m.