Question

what is the source of funds for capital expenditure​

Answer 1

Capital expenditures in fixed assets like plant and machinery, land and building, etc of business are funded using long-term sources of finance. Part of working capital which permanently stays with the business is also financed with long-term sources of funds.

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Answer 2

Answer:

• Investments in tangible assets such as plant and machinery, land and buildings, etc., are financed by long-term financing sources. Some working capital that remains with the company permanently is also funded from long-term financing sources.
• The primary sources of funding are retained earnings, debt, and equity. Companies use retained earnings from operations to amplify or distribute dividends to their shareholders.
• Companies raise funds by taking out private debt with a bank or going public (debt issuance).
• Examples of capital expenditures include the development of buildings, vehicles, land, or machinery that are expected to be used for more than one year. In these cases, all of these assets are used for the long term.
• When purchased, they are treated as CapEx to capture the benefit of each over multiple reporting periods.

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