Generally, in a company, the accumulation of money raised through its own economic activity. As a rule, undistributed profits are the source of self-financing. In addition, money also flows from the sale of assets – such as parts of a company: divestment; disinvestment – funds flow in. Another option is finance leasing. – Companies that are capable of self-financing on a larger scale have the opportunity to pursue business policy independently of banks and, as a rule, also of the supervisory board. It is disputed whether the risk of misallocation of capital increases in the case of self-financed companies compared with (partially) leveraged companies. However, it is generally seen as a risk if self-financing is made possible over longer periods of time due to rigid monopolistic or oligopolistic market positions in the absence of substitute competition (such as the German electricity industry). – See foreclosure, bootstrapping, financing, immunization, capital, internal, zero distribution, ranking theory, reserves, growth stocks, interest allocation function. – Cf. Deutsche Bundesbank Monthly Report, January 2012, pp. 18 et seq. (internal financing possibilities; empirical data).
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