Sources Of Finance

Question 1

What is working capital?

Answer 1

Short term finance required for the day to day running of a business

Question 2

Cash flow

Answer 2

A business needs sufficient inflows of cash to finance day to day outgoings, if it doesn’t have enough it’s said to have cash flow issues

Question 3

Sources of short term finance

Answer 3

Overdraft

Loans

Question 4

Source of medium term finance

Answer 4

Medium term loans

Same as short term loans but will have a lower interest rate which depends on how much and how long the loan is for

Question 5

Sources of long term finance

Answer 5

Long term loans 
Debentures (only available to plc's)
Issue of shares
Retained profit 
Sale and leaseback