Financial Planning For A Business Flashcards
What is Capital Expenditure for a business?
The purchase of fixed assets.
What is a cash-flow forecast?
The business version of a budget.
What does short term needs mean for a business?
Items of expenditure that must be paid for within the current financial year.
What is a venture capital company?
It invests in high risk or new businesses.
What is the APR? (Annual Percentage Rate.)
A standardised measure of borrowing cost.
What is leasing?
Involves renting an asset over a number of years.
What is Debt Capital?
Money borrowed from an external source that must be repaid with interest.
What is collateral?
Another name for security required when getting a loan.
Who are Debtors?
People who owe money to a business.
What is an overhead?
Another name for expenses.
Name three short-term needs
Wages, Stock, Light and heat
Name four medium terms.
Vehicles, raw materials, expanding the premises, machinery.
Name four long-term needs.
Premises, land, fixtures and fitting, insurance.
List three short-term sources of finance.
Bank overdraft, retained profit, invoice discounting.
List three medium-term sources of finance.
Leasing, credit card, hire purchase.
List three long-term sources of finance.
Mortgage, share capital, grants.
What is an internal source of finance?
When a business gets finance from inside the company.
What is an external source of finance?
When a business goes elsewhere to get finance.
What is operating on credit?
Buying products and selling them in order to pay for them in the first place.
Why is it important to manage debtors?
It is important because the business will go bankrupt if it only sells money without making it.
