Arranging Finance Flashcards
What are the three key financial aspects of a business plan?
- cash flow projections
- projected statements of financial position
- projected statements of financial performance
What are sources of finance?
- debt finance
- owners equity
What is debt finance and what does it include?
Debt finance is borrowing anything from a financial institution (banks). This includes terms, mortgage loans, overdraft and trade credit.
Why are budgets so important?
They are essential to ensure that the organisation is on target to meet goals set in planning process.
What is owners equity?
This is the owner’s share in the business. It is the amount the owners would expect if all the assets were sold and liabilities sold.
What is a mortgage?
Security on a loan, the lender can sell property if the loan is not repaid.
What is bank overdraft?
A loan that allows the borrower to write cheques up to a fixed amount more than they have in their bank account.
What should financial decisions be based on?
- sound management principles
- investigation of alternatives
- good budgeting
- evaluation procedures
