5016 - Investment and Financial Analysis - Corporate Finance and Investment: The Sources of Long Term Finance p86 - 144 Flashcards
1
Q
Major Internal sources of Short Terms Finance Methods
A
Reduced Inventory Levels
Delayed payments to trade payables
Tighter credit control
2
Q
Major Internal sources of Long Term Finance Methods
A
Retained Earnings
3
Q
Major EXTERNAL sources of long term finance
A
- Ordinary Shares
- Preference Shares
- Borrowing
- Finance leases
- Hire-Purchase agreements
- Securitisation of assets
4
Q
Major INTERNAL sources of short term finance
A
- Bank Overdraft
- Bills of Exchange
- Debt Factoring
- Invoice Discounting
5
Q
Major Forms of Long Term Capital
A
External:
Ordinary and Preference Shares
Loan Capital
Internal:
Retained Earnings
6
Q
Pecking Order Theory
A
The idea of of company prioritizing their sources of finance from internal financing to equity and consider equity financing as a last resort.
- Retained profit used to finance the business
- Failing this loan capital used
- Failing this share capital will be used
7
Q
What is included in the Statement of Financial Position/Balance Sheet
A
- Non Current Assets
- Current Assets
- Capital or Shareholder Equity
- Debt (Loans or Bonds) Non-Current Liability
- Debt (Short Term Loans or Suppliers) Current Liability
