external sources of finance: long-term Flashcards
what can external sources of finance be used to obtain?
expensive non-current assets
what can external sources of finance be used to support an enterprise?
growth
what is this type of finance usually repaid for how long?
usually repald over a long period of time.
mortgages:
what are mortgages?
long-term sums of money borrowed from a bank
mortgages:
what are mortgages usually secured against?
property
mortgages:
how are mortgages paid back?
In instalments over a long perlod of time, for example 25 years.
mortgages:
what be raised quickly?
large amount of finance
mortgages:
what is charged?
interest
mortgages:
what can be repossessed if repayments are missed?
property
share capital:
what is share capital only available to?
private or public limited enterprises
share capital:
how is share capital raised?
by Issuing (or selling) shares In the enterprise
share capital:
what can the company decide to existing shareholders, professional investors or to the general public?
can decide to Issue more shares In the enterprise for sale
share capital:
what are general public considered as?
the public limited companies
share capital:
what are professional investors considered as?
private limited companies
share capital:
what can enterprises obtain?
finance from the sale
share capital:
what does not need to be paid back?
the shares
share capital:
what can be raised?
large amounts of finance
share capital:
who needs to be paid a dividend each year?
shareholders
share capital:
what do shareholders become?
part of owners of the enterprise
taking on new partners:
why can taking on new partners bring in additional finance?
as the partner pays for a stake In the enterprise
taking on new partners:
what can be raised quickly?
finance
taking on new partners:
what could new partners have to invest into the enterprise?
have more money available from other resources/enterprises
taking on new partners:
what is likely to be greater than just one?
The borrowing capacity of more people
taking on new partners:
what could new partners not agree on?
all business decisions
taking on new partners:
why are decision-making be more slower?
as more people are involved
taking on new partners:
what are shared?
profit
