Sources of finance Flashcards
1
Q
Sources of finance MUST be…
A
adequate for the needs of the business, e.g. sum being large enough to sufficiently cover costs.
2
Q
Importantly, it must not leave the business with …
A
large interest payments
- ESPECIALLY if business = already burdened with existing high, regular payments.
3
Q
What are the 5 Long-term sources of finance?
A
- Share capital
- Retained profits
- Venture capital
- Mortgages
- Long-term bank loans
4
Q
What are the 4 factors influencing choice and amount of finance required?
A
- Purpose of finance (e.g. short term or long term)
- Cost of finance (e.g. interest, dividends)
- Flexibility of finance (which repayments required and when)
- Organisational structure of business (ability to raise finance)
5
Q
-Share capital
A
Long-term
6
Q
-Retained profits
A
Long-term
7
Q
-Venture capital
A
Long-term
8
Q
-Mortgages
A
Long-term
9
Q
-Long-term bank loans
A
Long-term
10
Q
-Medium-term bank loans
A
Medium-term
11
Q
Leasing
A
Medium-term
12
Q
Hire-purchase
A
Medium-term
13
Q
Government grants
A
Medium-term
14
Q
Bank overdraft
A
Short-term
15
Q
Trade creditors
A
Short-term
