Sources of Finance

Question 1

what is Trade credit?

Answer 1

Items bought from suppliers on a ‘by now pay later’basis

Question 2

Are loans a long term source or a short term source

Answer 2

long term

Question 3

Name some long term sources of finance

Answer 3

• personal savings
• venture capital
• share capital
• loans
• retained profit
• crowd fundings

Question 4

what is crowd funding?

Answer 4

fundraising to collect money from a larger number of people via online platforms
used by start up companies or growing businesses

Question 5

advantages to trade credit

Answer 5

• gives business more cash to use in immediate future
• does not incur interest charges

Question 6

disadvantages to trade credit

Answer 6

can only be used to buy certain goods
bills have to be settled within 30, 60 or 90 days

Question 7

What is overdraft ?

Answer 7

arrangement with the bank to spend more money than in their bank account

Question 8

What is share capital
o stock which is paid for at a later date
o fiance raised from the sale of shares in an ltd
o sum of money borrowed from a bank
o profit generated from previous years

Answer 8

finance raised from the sale of shares in an ltd

Question 9

venture capital

Answer 9

form of private equity and a type of financing for startup companies