20. Business finance Flashcards

1
Q

Sources of finance

A

Internal

External

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2
Q

Internal sources of finance

A

Personal savings/owners funds
Retained profit
Sale of assets

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3
Q

External sources of finance

A
Share capital
Loans/mortgage
Overdraft facilities
Hire purchase
Grants
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4
Q

Long term finance

A

Repaid over a long period of time (roughly 5-25 years)

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5
Q

Long term finance sources

A
Owners own capital/savings
Share capital
Loans 
Mortgages
Retained profit
Leasing
Grants
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6
Q

Short term finance

A

Money that may have to be paid immediately or fairly quickly (1-5 years)

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7
Q

Short term finance sources

A

Bank overdraft

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8
Q

Cash flow

A

A business needs sufficient inflows of cash to finance its day-to-day outgoings

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9
Q

Inflows

A

Money received by the business

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10
Q

Outflows

A

Refers to money paid out by the business

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11
Q

Inflows examples

A

Sales revenue
Capital
Loans
Grants

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12
Q

Outflows examples

A

Purchases
Rent & rates
Wages & salaries

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13
Q

Owners capital (funds)

A

Owner uses their savings and puts money into business

A sole trader will usually start up a business with their own savings

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14
Q

Share capital

A

A share in the business is sold to an individual or another business

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15
Q

Venture capitalist

A

A person or company who buys shares in a business that they hope will grow fast

e.g. Dragons Den

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16
Q

Bank loan

A

Amount of money is borrowed from the bank, then repaid (with interest) over a set period of time (1 to 10 years)

17
Q

Mortgage

A

Long term loan provided by a bank in order to buy property

18
Q

Retained profits

A

Money is kept in the business by the owners

19
Q

Leasing

A

Businesses rent equipment from other companies rather than buying them

20
Q

Government grants

A

Money given to the business by the government and EU (possibly to help start up)

21
Q

Bank overdraft

A

The bank allows the business to draw more money from their bank account than they actually have in it

22
Q

Trade credit

A

When a supplier allows you a period of time (e.g. 30 days) to pay for goods and services

23
Q

Factoring

A

A business is able to receive cash immediately for the invoices it has issued from a factor (e.g. bank) instead of waiting 30 days to be paid