2.1 Raising finance Flashcards
capital
the money provided by the owners in a business
capital expenditure
spending on business resources that can be used repeatedly over a period of time
internal finance
money generated by the business or its current owners
retained profit
profit after tax that is ‘ploughed back’ into the business
revenue expenditure
spending on business resources that have already been consumed or will be very shortly
sale and leaseback
the practice of selling assets, such as property or machinery, and leasing them back from the buyer
authorised share capital
the maximum amount that can be legally raised
bank overdraft
a business can spend more money than it has in its account, the overdraft limit is agreed and interest is only charged when the business goes overdrawn
capital gain
the profit made from selling a share for more than it was bought
crowd funding
where a large number of individuals invest in a business or project on the internet, avoiding the use of a bank
debenture
a long-term loan to a business
equity
an ordinary share
external finance
money raised from outside the business
issued share capital
amount of current share capital arising from the sale of shares
lease
a contract to acquire the use of resources such as property or quipment
peer-to-peer lending (P2PL)
where individuals lend to other individuals without prior knowledge of them, on the internet
secured loans
a loan where the lender requires security, such as property, to provide protection in case the borrower defaults
share capital
money introduced into the business through the sale of shares
unsecured loans
where the lender has no protection if the borrower fails to repay the money owed
venure capitalism
providers of funds for small or medium-sized companies that may be considered too risky for other investors
collateral
an asset that might be sold to pay a lender when a loan cannot be repaid
incorporated business
a business model in which the business and the owner have separate legal identities
limited liability
a legal status that means shareholders can only lose the original amount they invested in a business
long-term finance
money borrowed for more than one year
