Management of finance Flashcards
What are the sources of finance
Bank loans
Ownerss savings
Government grant
Trade credit
How to calculate gross profit on an income statement
Sales less cost of sales
How to calculate profit of the year on a income statement
Gross profit less expensices
How is ict used to increase efficiency in finance department
Making spreadsheetspowerpoint
Accounting software
Identify the sources if finance
Bank overdraft
Trade credit
Retained profits
Grants
Bank loan
Leasing
Share issue
Mortgage
Describe sources of finance(4)
Retained profits this I where profits are kept back from previous years to put back into the buisness
Government grants- this is where funding can be given to the buisness from government often as an incentive to buisness to set up or expand
Bank loan- where your bank agrees to lend you a certain amount if money for a specific purpose for a specific period of time with agreed amounts to repay each month
Share issue- this is where the buisness invites people to buy a share of athe buisness
Advantages of retained profits
This method doesn’t paying interest to another buisness
An advantage if a overdraft
Ussuful to cover periods where you have little coming in but still have bills to pay
What’s an advantage of trade credit
Ussuful to cover period if time where you have little cash but need to buy more stock
What’s an advantage of a government grant
Dosnt have to be paid back
What’s an advantage of a bank loan
Helps buisness to plan and loan repayment is spread out over a number of years
What’s an advantage if leasing
Large sums are not spent buying equipment
What’s an advantage of a share issue
Shareholders will have a say in decision making
What’s an advantage jf a mortgage
It is repaid in instalments
