问答题 When your family wants to buy or replace a car, a television, or a washing machine, you find the money either from savings or by borrowing from the bank, a hire-purchase company or perhaps a friend. 21) Similarly, a family buying a house for the first time commonly borrows from a bank.
If you own a private business, a garage, a shop, or a farm, you will need, from time to time, to buy new equipment, new furnishings, or, if you are doing well, new premises so that you can expand. 22) Some of the cost you can meet from the profits you have kept in the business, but often you will need help.
You will go to your bank, to a finance house, or perhaps to a relative or friend for finance provided from his savings. When you borrow money or raise money in this way, you pay it back out of future profits.
Many large businesses, however, need cash for new developments or expansion far in excess of what can be provided from their profits or from private sources of capital. A new factory, an oil-well in the North Sea, can cost millions of pounds to construct and bring into production; 23) a new design of car or brand of medicine likewise can cost millions of pounds to design, develop, test and market before it reaches the stage where it earns a profit.
Often these costs can be met from profits earned in other parts of the business or from reserves built up from profits earned in past years. 24) Sometimes, however, it is necessary, and often it may be more advantageous, to raise new money from other sources.
There can be little prospect of raising the sort of sums needed by major businesses from friends or acquaintances, and generally the banks are reluctant to provide sufficient cash on a permanent basis for long-term projects, though they will provide short-term finance.
25) Such companies can sometimes only raise the money they need to stay in the forefront of industry and develop new products and sources of production by turning to the public at large and inviting it to lend them cash or take a share in the business in exchange for a share in future profits. This they can do by offering shares in the business or loan capital through The Stock Exchange.