2.1 - Raising Finance Flashcards

1
Q

Grant

A

Money awarded to a business to help it grow.

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2
Q

Share Capital

A

The money a company raises by issuing common or preferred stock.

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3
Q

Common stock

A

Stock brought by shareholders:

  • Voting rights
  • Dividends fluctuate
  • More volatile than Preferred stock
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4
Q

Preferred stock

A

Stock brought by shareholders:

  • No voting rights
  • Dividends are set
  • Less volatility than common stock
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5
Q

Venture Capital

A

Form of equity financing where capital is invested in exchange for equity

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6
Q

Equity

A

Ownership

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7
Q

Floatation

A

Process of converting a private company into a public company by issuing shares available for the public to buy.

  • Method of raising capital
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8
Q

Crowd Funding

A

Raising small amounts of capital from a large number of investors

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9
Q

De-Stock

A

Reducing the amount of stock held

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10
Q

Trade Credit

A

Arrangement of buying goods without making immediate payment

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11
Q

Overdraft

A

Line of credit on your business bank account (Short term cash flow)

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12
Q

Working Capital

A

Difference between current assets and current liabilities.

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13
Q

Debt factoring

A

When a business sells its accounts (Outstanding balances) to a third party for a discount.

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14
Q

Cash flow forecast

A

Predicts the cash inflows (receipts) and outflows (expenditures) for a business.

  • Determines the cash funds a business has at one time
  • Businesses can take measures to ensure enough finance is available
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15
Q

Net Cash flow

A

Difference between inflows and outflows over a trading period

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16
Q

Opening balance

A

Cash carried forward from a previous trading period

17
Q

Closing balance

A

Money remaining at the end of trading period

18
Q

How to Interpret cash-flow forecasts

A
  • Are our monthly inflows greater than our monthly outflows?
  • What are our forecast periods of high expenditure?
  • Are inflows increasing over time?
  • Is there a seasonal trend?
  • Do we have enough cash reserves to cover unexpected costs?
19
Q

Stakeholder vs Shareholder

A
  • Stakeholder is anyone that is impacted by an organisations decisions.
  • Shareholder has partial ownership of the company.