3.5.3 Making financial decisions: sources of finance Flashcards

1
Q

A source of finance

A

This refers to the way in which a business raises the finance that it needs for some activity

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2
Q

Internal source of finance

A

This is one that exists within the business

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3
Q

An external source of finance

A

This is an injection of funds into to the business from individuals, other businesses or financial institutions

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4
Q

Debt factoring

A

This is where businesses buy the customer bills from a business and offer immediate cash in return for a percentage cut

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5
Q

An overdraft

A

This exists when a business is allowed to spend more than is in their account up to an agreed limit

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6
Q

Retained profits

A

This is the profit that is made by the business that is kept and can be reinvested back into the business

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7
Q

A bank loan

A

This is an amount of money provided to a business for a stated purpose in return for a payment in the form of interest charges

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8
Q

Share capital

A

This is finance invested into a company as a result of selling shares in the business

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9
Q

Venture capital

A

These are funds given to businesses to be relatively high risk in the form of share or loan capital

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10
Q

Short-term finance

A

This is finance needed for a limited period of time, normally less than one year

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11
Q

Long-term finance

A

These are those sources of finance that are needed over a longer period of time, usually over a year

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