Equity Flashcards
Venture capital
Venture capital is a financial capital invested in a new or rapidly expanding business economy where there is a high level of risk.
What is the essence of venture capital
Venture capital is the purchase of equity in a business
It is usually involved private company and unlisted public company
What accounting equation describe
The accounting equation describe as a equation of use of funds and of the source of funds
What is venture capital usually done
Venture capital is an injection of equity in a business, and it is usually done in cash.
Purpose of venture capital
The purpose of venture capital is to grow the business. It does this by providing additional assets.
What decision need precious owner to do
When the VC investor decides to purchase equity,the original owner must decide to either sell their own shares or create new shares
What does equity investment change
Equity investment change the size of equity and also the make/up of equity
Do equity need to be repaid?
No there is no obligation to repay investments that are made in the form of equity
The venture capital provides cash, but the business may use this cash to
Buy more machinery
Buy more stock
Hire more people
Advertise in new products
Exit strategy
An investor ‘a plan for getting their investment back and potentially realizing a profit
Break-even point
Where total costs equal total income from sales and the company makes neither a profit or loss
Personnel
The people who are employed in an organization
Sales forecast
The sales business expect to achieve in a particular period of time
Revenue
The oral income received from business before any expenses are paid
Competitive advantage
What an organization can do better than its competitors