FINANCE Flashcards
The purpose of the finance department is to
oversee all the planning and management of all financial resources in a business
Start-up costs include….
premises, initial marketing, buying stock, recruiting employs, legal fees , equipment and fixtures and fittings
examples of Organic growth
R&D into new products, opening more stores, recruiting additional staff, increasing stock holdings
examples of External growth
buying out another business, legal fees for mergers or takeovers, redundancies, re branding
Internal sources of finance
- Owner’s capital
- Retained profits
- Sales of assets
External sources of finance
- Bank loan
- Overdraft
- Trade credit
- New partner
- Share issue
- Crowdfunding
Trade credit
paying suppliers a period of time after the goods or services have been received
Retained profit
kept within a business from profit for the year to help finance future activities
Sale of assets
An asset is something that is owned by a business e.g.
Vehicles
Land
Machinery
Owners’ capital
Owners’ capital is how much the owner has invested in the business
Crowdfunding
involves raising finance from a large number of people each investing different, often small, amounts of money
Examples of costs
Materials Equipment Wages Marketing Utilities e.g. heat and light, power etc Transport Loan repayments
Fixed costs
stay the same regardless of output
Variable costs
change with the amount of output
Revenue
number of items sold x the selling price per item
