Key terms 2.1-Raising Finance Flashcards
what is the definition of capital?
the money provided by the owner in a business
what is the definition of capital expenditure?
spending on business resources that can be used repeatedly over a period of time
what is the definition of internal finance?
money generated by the business or its current owners
what is the definition of retained profit?
profit after tax that is ‘ploughed’ back into the business
what is the definition of revenue expenditure?
spending on business resources that have already been consumed or will be very shortly
what is the definition of sale and leaseback?
the practice of selling assets such as property or machinery and leasing them back from the buyer
what is the definition of authorised share capital?
the maximum amount that can be legally raised
what is the definition of bank overdraft?
an agreement between a business and a bank that means a business can spend more money than it has in its account. the overdraft limit is agreed and interest is only charged when the business goes overdrawn
what is the definition of capital gain?
the profit made from selling a share for more than it was bought
what is the definition of crowdfunding?
where a large number of individuals invest in a business or project on the internet avoiding the use of a bank
what is the definition of debenture?
a long term loan to a business
what is the definition of external finance?
money raised from outside the business
what is the definition of issued share capital?
amount of current share capital arising from the sale of shares
what is the definition of lease?
a contract to acquire the use of resources such as property or equipment
what is the definition of peer to peer lending?
where individuals lend to other individuals without prior knowledge of them on the internet
what is the definition of permanent capital?
share capital that is never repaid by the company
what is the definition of equities?
another name for an ordinary share
what is the definition of secured loans?
a loan where the lender requires security such as property to provide protection in case the bower defaults
what is the definition of share capital?
money introduced into the business through the sale of shares
what is the definition of unsecured loans?
where the lender has no protection if the borrower fails to repay the money owed
what is the definition of venture capitalism?
providers of funds for small or medium-sized companies that may be considered too risky for other investors
what is the definition of collateral?
an asset that might be sold to pay a lender when a loan cannot be repaid
what is the definition of incorporated business?
a business model in which the business and the owner/s have seperate legal identities
what is the definition of limited liability?
a legal status that means shareholders can only lose the original amount they invested in the business
what is the definition of long-term finance?
money borrowed for more than 1 year
what is the definition of rights issue?
issuing new shared to existing shareholders at a discount
what is the definition of short-term borrowing?
money borrowed for 12 months or less
what is the definition of undercapitalised?
a business not raising enough capital when setting up
what is the definition of unincorporated business?
a business model in which ts no legal difference between the owner/s and the business
what is the definition of unlimited liability?
a legal status which means that business owners are liable for all business debts
what is the definition of business plan?
a plan for the development of a business giving details such as the products to be made, resources needed, and forecasts such as costs, revenues and cash flows
what is the definition of cash-flow forecast?
the prediction of all expected receipts and expenses of a business over a future time period which shows the expected cash balance at the end of each month
what is the definition of cash inflows?
the flow of money into a business
what is the definition of cash outflows?
the flow of money out of a business
what is the definition of net cash flow?
difference between the cash flowing in and the cash flowing out of the business in a given time period
what is the definition of solvency?
the degree to which a business meets its debts when they fall due
