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IGCSE Business Studies > 3.1 Business Finance - Sources > Flashcards

3.1 Business Finance - Sources Flashcards

1
Q

Why is finance needed?

A
  1. Satisfy Short term needs (Expenses)
  2. Satisfy Long Term Needs (Debts)
  3. Start-up/expand
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2
Q

What are the two kinds of financial resources?

A
  1. Internal Sources
  2. External Sources
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3
Q

What are the Internal Sources of Finance?

A
  1. Selling assets
  2. Retained Profits
  3. Personal Savings
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4
Q

What are the external sources of finance?

A

Short-Term:

  1. Overdrafts
  2. Trade Credit
  3. Debt Factoring

Long-Term:

  1. Loans
  2. Leasing/Hire Purchase
  3. Debentures
  4. Share Issues
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5
Q

What are the advantages and disadvantages of using retained profits?

A

Advantages:

  1. Cheaper, no interest repaid
  2. faster

Disadvantages:

  1. Reduces dividends, upsets shareholders
  2. Opportunity Cost
  3. Business may not have enough retained profits
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6
Q

What are the advantages and disadvantages of selling assets?

A

Advantages:

  1. Employing redundant assets
  2. no direct cost to business

Disadvantages:

  1. Leasbacking can increase expenses with further increasing rates.
  2. Takes Time
  3. New businesses don’t have surplus
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7
Q

What are the advantages and disadvantages of using personal savings?

A

Advantages:

  1. Cheaper
  2. Immediate

Disadvanatges:

  1. Owners don’t have enough
  2. not guaranteed return of money
  3. Increases risk to owner
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8
Q

what are the advantages and disadvantages of using overdrafts?

A

Advantages:

  1. Can draw more than your account
  2. Flexible

Disadvantages:

  1. Variable Interest Rates
  2. Repaid at short notice
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9
Q

What are the advantages and disadvantages of using trade credit?

A

Advantages:

  1. Get more time

Disadvantages:

  1. Discount relinquished
  2. supplier may refuse further feliverues
  3. supplier may demand payments if done too often
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10
Q

What are the advantages and disadvantages of using venture capitals?

A

Advantages:

  1. Gets investment and help from professionals
  2. Can be monetary, technical etc
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11
Q

What are the advantages and disadvantages of issuing shares?

A

Advantages:

  1. Faster
  2. No repaid

Disadvantages:

  1. May dilute share value
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12
Q

What are the advantages and disadvantages of crowdfunding?

A

Advantages:

  1. Free profit
  2. Doesn’t need to be repaid in money
  3. Takes time
  4. May not appeal to other people

Disadvantages:

  1. Takes Time
  2. People may be reluctant
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IGCSE Business Studies (23 decks)

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