Business Finance Flashcards
1
Q
Sources of finance
A
Businesses cannot survive without finance, whether in the form of initial funds to start the business:
Working capital - is the money needed to finance the day-to-day running of the business. It allows stock to be bought and wages and bills to be paid.
Investment capital - helps the business grow
Capital expenditure - businesses just starting up need money to invest in fixed assets such as buildings and equipment.
2
Q
Internal sources of finance
A
Money that is generated from within the business or from the business owners own capital
- Retained profits / own funds
- Working capital
- Sale of assets
3
Q
External sources of finance
A
Money that is raised from sources outside of the business
- Bank Loan
- Overdraft
- Trade Credit
- Factoring
- Leasing
