Sources of Business Finance Flashcards
Retained Profit
Money kept in the business to fund future expenditure
Retained Profit Formula
Sales Revenue - Total Cost
Net Current Assets
Shows the money available in the business to fund day-to-day expenditure
Net Current Asset Formula
Current Assets - Current Liabilities
Sale of Assets
Selling an item of value in order to achieve a cash injection
Owner’s Capital
Money invested in the business from the owner’s personal savings
Loans
Money borrowed from a financial institution normally for a set period of time and for a specific purpose
Crowdfunding
Attracting investment from a large number of speculative investors, many of whom may invest relatively small amounts
Mortgages
Long-term loans, normally around 25 years, are secured against a specific asset, e.g. a building
Venture Capital
Investment from an experienced entrepreneur in return for a stake in the business
Debt Factoring
Selling the debts of a business to a third party in order to receive a quick cash injection
Hire Purchase
Paying to use an asset in instalments to spread the cost over its useful life
Leasing
Paying to use an asset in instalments, however, the ownership of the asset remains with the supplier throughout the lease agreement
Trade Credit
A period of time, offered by suppliers, to allow the customer to purchase now and pay later
Grants
A lump sum provided to a business by the government or another organisation to be used for a specific purpose
