Sources of Finance Flashcards
1
Q
Why do firms need finance?
A
- start up capital
- cover costs (from poor initial cash flow)
- cover delayed payments of customers
- cover day to day running costs
- to expand
2
Q
What are sources of short term finance?
A
Trade credit
Overdrafts
3
Q
What is trade credit?
A
businesses may give firms one or two months to cover costs for certain purchases
4
Q
What is overdraft?
A
bank lets firms take out more money out of their bank accounts than is actually in the bank balance.
5
Q
What are long term sources of finance?
A
- loans
- personal savings
- share capital
- venture capital
- retained profit
- crown funding
6
Q
What is share capital?
A
individuals can buy shares in a business, business raises money through issuing shares
7
Q
What is venture capital?
A
selling shares to individuals or business who specialise in giving finance or expanding small firms
8
Q
What is crowd funding?
A
a large number of people contribute money towards starting up a business or funding a business idea
