Agriculture Reference
In-Depth Information
Plate 11.2
Harvesting equipment
Leasing, a form of fi nancing, is commonly used to fi nance large and/or specialized equipment.
Photo courtesy of USDA Natural Resources Conservation Service.
owned it could be sold to, at least, minimize the amount of the fi nancial commitment. Finally,
leased property may increase in value, and such increases in value are only of benefi t to the
lessor or owner.
Internal fi nancing for the agribusiness
One of the most important sources of capital is the money obtained from retained earnings.
Some managers fail to fully understand the importance and role of retained earnings. It is not
that a manager lacks awareness of these funds, but because he or she simply has not used the
fi nancial tools and techniques previously described, he or she has no idea how to use retained
earnings to the fullest extent.
Equity capital
Equity capital
represents funds that are obtained by the fi rm through retaining the profi ts it
has made, through the investment of more money by the owners, or through taking into the
business additional people who are willing to risk their funds. In some small or new busi-
nesses, this may be the only alternative for securing capital funds. A specialized type of
