chapter 29 business finance Flashcards

1
Q

start-up capital

A

the capital needed by an entrepreneur to set up a business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

working capital

A

the capital needed to pay for raw materials, day-to-day running costs and credit offered to customers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

short-term finance

A

money required for short periods of time of up to one year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

long-term finance

A

money required for more than one year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

profit

A

the value of goods sold (revenue) less costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

liquidity

A

the ability of a business to pay its short-term debts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

administration

A

when administrators manage a business that is unable to pay its debts with the intention of selling it as going concern

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

bankruptcy

A

the legal procedure for liquidating a business (or property owned by a sole trader) which cannot fully pay its debt out of its current assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

liquidation

A

when a business ceases trading and its assets are sold for cash to pay suppliers and other creditors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

current assets

A

assets that either are cash or likely to be turned into cash within 12 months (inventory and trade receivables or debtors)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

current liabilities

A

debts that usually have to be paid within one year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

capital expenditure

A

the purchase of non-current assets that are expected to last for more than one year, such as buildings and machinery

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

revenue expenditure

A

spending on all costs and assets other than non-current assets , which includes wages, salaries and inventory of materials

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

internal sources

A

raising finance from the business’s own assets or from profits left in the business (retained earning)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

external sources

A

raising finance from sources outside the business for ex banks

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

retained earnings

A

profit after tax retained in a company rather than paid out to shareholders as dividends

17
Q

non-current assets

A

assets kept and used by the business for more than one year

18
Q

overdraft

A

a credit that a bank agrees can be borrowed by a business up to an agreed limit as and when required

19
Q

hire purchase

A

a company purchases an asset and agrees to pay fixed repayments over an agreed time period. the asset belongs to the purchasing company once the final payment has been made

19
Q

factoring

A

selling of claims over trade receivables (debtors) to a specialist organisation (debt factor) in exchange for immediate liquidity

19
Q

leasing

A

obtaining the use of an asset and paying a leasing charge over a fixed period, avoiding the need to raise long-term capital to buy the asset . the asset is owned by the leasing company

20
Q

long-term loans

A

loans that do not have to be repaid for at least one year

21
Q

debentures

A

long-term bonds issued by companies to raise debts finance, often with a fixed rate of interest

22
Q

share ( or equity ) capital

A

permanent finance raised by companies through the sales of shares

23
business mortgages
long-term loans to companies purchasing a property for business premises, with the property acting as collateral security on the loan
24
venture capital
risk capital invested in business start-ups or expanding small businesses that have good profit potential but do not find it easy to gain finance from other sources
25
collateral security
an asset which a business pledges to a lender and which must be sold off to pay a debt if the loan is not repaid
26
rights issues
existing shareholders are given the right to buy additional shares at a discounted price
27
microfinance
providing financial services for poor and low-income customers who do not have access to the banking services, such as loans and overdrafts, offered by traditional commercial banks
28
crowd funding
the use of small amounts of capital from a large number of individuals to finance a new business venture