Full internal self-financing provides financing of enterprise's capital investments exclusively at the expense of its own financial resources formed from domestic resources (net income, depreciation deductions, internal farm reserves, stable liabilities).
Owners of the enterprise have a choice between:
- complete withdrawal of received in the reporting period profit with a purpose of its consumption or investment in other projects;
- reinvestment of a profit fully in activity of a same enterprise, as this application is assumed to them more preferable;
- a combination of the first two options, providing the distribution of received income in two parts - reinvested earnings and dividends.
Authorised (share) capital
The authorized capital of the open or closed joint stock company (JSC, CJSC) is composed of the nominal value of company's shares authorized and issued by the company and acquired by the shareholders.
The legal frameworks of creation and registration of the joint stock companies in Russia are established by the Federal Law of 26.12.1995 N 208-FZ "On Joint-Stock Companies" with corrections and additions, entered into force (see. legal frameworks, such as the Federal Law of 26 December 1995 N 208-FZ "On Joint Stock Companies").
The minimum share capital of the company of an open company should be at least one thousand times the amount of the minimum wage established by federal law at the date of registration of the company, and of a closed society - not less than one hundred times the amount of the minimum wage established by the federal law on the date of state registration.
Authorized (share) capital of a limited liability company is composed of cash, securities and property of participants or their property rights, or of any other means that have monetary value.
The nominal value of the share of each of the participants in the capital of a company is determined by the memorandum and Charter of a company. The size of the authorized (share) capital of the company shall not be less than ten thousand rubles.
The legal frameworks for the creation and registration of a limited liability companies are established in Russia by the Federal Law of February 8, 1998 N 14-FZ "On Limited Liability Companies" with corrections and additions, entered into force (see legal frameworks, such as the Federal Law of February 8, 1998 N 14-FZ "On Limited liability Companies").
The net income or undistributed income of the company is used to pay an investment income (dividends) to the shareholders (participants) of the company, or to finance new investment projects in order to expand the business of the company or in order to increase its efficiency. Net income is formed as the difference of income and expenses of the company, excluding the taxes from the income (the Tax Code of the Russian Federation, the first part of 31 July 1998 N 146-FZ and the second part of August 5, 2000 N 117-FZ).
Stable liabilities – current assets equated to the own, not belonging to the enterprise, but constantly located in its economic turnover.
The most stable liabilities are advances of clients and customers (advance payments from buyers of production, which is not sold through the retail distribution network, funds on personal accounts of subscribers of mobile operators and other phone companies, etc.).
Other own funds
Depreciation deductions, reserve fund, accumulation funds, insurance claims.