Sources Of Finance Flashcards
Retained profits
Profirs kept in the company after tax and dividends have been subtracted
Share capital
Money received from shareholders who own a company and vote whether to appoint directors at the AGM
Venture capitalists
Provides funds for small & medium sized firms who are considered too risky by the banks
Advantages/disadvantages of ahare capital or venture capital
Advantages
No repayments which helps cash flow
No security is done
Dividends
May lose control if u sell more than 50% of the business
Bank Loan definition
Fixed amounts that must be paid plus interest over agreed amounts of time
Advantages/disadvantages of bank loan
Advantages
Repayments online last for a fixed period of time
No control of business is lost
Disadvantages
Repayments must be made damages cash flow
Interest is an additional fixed costs reduces profits
Crowd funding definition
Inviting a large number of investors to provide a small loan or share capital
Overdraft definition
The bank account is allowed to have a negative balance
Interest paid on amount overdrawn