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Theme 2 Business AS > Raising Finance > Flashcards

Raising Finance Flashcards

1
Q

What are the benefits of a bank loan?

A

Long time to pay back

Low interest

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2
Q

What are the drawbacks of a back loan?

A

Interest to pay

Unlimited liability

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3
Q

What are the benefits of an overdraft?

A

Flexible

Help cash flow

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4
Q

What are the drawbacks of an overdraft

A

High intrest

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5
Q

What is a business angel?

A

An individuals who use their personal wealth to provide capital to start-up and early-stage businesses in return for a share of the company’s equity.

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6
Q

What are the benefits of a business angel?

A

Give knowledge & contacts

No repayment

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7
Q

What are the drawbacks of a business angel?

A

Hard to find

Loss of control

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8
Q

What are the benefits of crowdfunding?

A

No repayment

No intrest

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9
Q

What are the drawbacks of crowdfunding?

A

Take a while to raise money

Must reach target

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10
Q

What are the drawbacks of raising money through family/friends?

A

Hard to persuade

Personal fall out

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11
Q

What are the advantages of using share capital?

A

Large amount raised

Gain money world wide

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12
Q

What are the disadvantages of using share capital?

A

loss of control

Could be taken over

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13
Q

What is a venture capitalist?

A

An individual who invests in a business in return for a % of the business ownership

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14
Q

What are the benefits of a venture capitalist?

A

Gain knowledge/contacts

Advice given

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15
Q

What are the drawbacks of a venture capitalist?

A

loss of control

Investor has control

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16
Q

Benefits of leasing?

A

Helps with budgeting

17
Q

Drawbacks of leasing?

A

Don’t own equipment

Puts pressure on outflows

18
Q

Benefits of trade credit?

A

Slows down outflows

Less likely to go bankrupt

19
Q

Drawbacks of trade credit?

A

Unethical

hard to get for small companies

20
Q

Benefits of grants?

A

Reduce unemployment

No repayments

21
Q

Drawbacks of grants?

A

Only accessed by companies that are ethical

22
Q

What is the calculation for opening balance?

A

Last months closing balance

23
Q

What is the calculation for closing balance?

A

Opening balance + NCF

24
Q

What is the calculation for NCF?

A

Inflows - Outflows

25
Q

Examples of Inflows? (6)

A 
Sales revenue
Receivables (debetors)
Loans 
Share capital
Intrest 
Business angel/venture capitalist
26
Q

Examples of outflows? (6)

A 
Payables (Creditors)
Utilities
wages
mantensie
Rent
Corporation tax
27
Q

What happens if a company over invests in fixed assests?

A

Too many/too high outflows

28
Q

What happens if a business has too much stock?

A

Too many/too high outflows

29
Q

What happens if a business gives customers too much trade credit?

A

Slows down inflows

30
Q

What does seasonal demand do to a business?

A

Fluctuates inflows & outflows

31
Q

What happens if a business over trades too quickly (grows)?

A

Unmatched inflows & outflows

32
Q

What is a cash flow forecast?

A

A document that predicts the cash flowing into the business and out of the business

Theme 2 Business AS (4 decks)

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