2.1 Raising Finance Flashcards
Economic variables
Features of an economy which have effects on business and consumers e.g. unemployment, inflation and exchange rates
Internal finance
The raising of capital/cash from within/ inside the business e.g. business/owners capital, personal savings, retained profit
Personal savings/owners capital
A resource of internal finance provided by the owner of a business / personal money from the owner
retained profit
profit is re-invested back into the business which is not paid as a dividend. it is an internal source of finance
sale of assets
a type of internal finance, involves selling resources that belong to the business
2.1.2
bank loan
an external method of finance/money borrowed from a bank paid back, with interest (over a period of time)
business angels
individuals who invest in a business in exchange for a stake in the business (shares)
crowd funding
an external source of finance where a large number of individuals provide funding for a business or project in return for shares/ free products/discounts
external finance
money raised from outside the business
grant
a sum of money given by a government or other organisation. it does not need to be repaid and no interest is charged
leasing
a contact to acquire the use of resources such as property or equipment
overdraft
when a business has a negative balance in their bank account because the amount withdrawn is greater than the current balance
share capital
the finance raised a business issuing/selling of new shares
peer-to-peer funding
when a person lends money to other individuals or businesses via online transactions
loan
an external source/method; amount of money borrowed, usually repayable after a fixed term of more than 12 months
trade credit
where a firm receives stock/inventory/raw materials from a supplier, which it does not have to pay for until later
venture capital
external source of finance when the business issues shares to a small number of investors in return for a capital injection into the company
limited liability
the obligation of a shareholder for the debts of a business is limited to the value of their investment
2.1.3
liability
a liability is an obligation to pay another person/lender/supplier
unlimited liability
the obligation of a business owner to cover all the debts of the business
2.1.4
business plan
a document giving details of a variety of aspects about the business in order to provide a strategic look at the business and to attract investors. it contains details such as the product, costs, revenues, cash-flow forecasts
cash flow
the movement of cash into and out of a business over a period of time
cash inflow
the flow of cash into a business
cash outflow
the flow of cash out of a business
