Sources of Finance Flashcards
Asset
Something a business owns that has monetary value such as a delivery van or money in the bank.
Capital
The money and equipment invested into a business.
Deposit
A part payment made to secure the purchase of an item.
Instalments
Smaller chunks that a large payment is broken down into that are paid back over a period of time.
Interest
Interest is the annual charge for borrowing money. It is usually expressed as a percentage of the total borrowed.
Shares
A unit of ownership in a company.
Cash flow
The movement of money into and out of a business’ bank accounts.
Credit
The amount of money that a financial institution or supplier will allow a business to use, which it must pay back in the future at an agreed time.
Insolvency
When a business runs out of cash and can no longer pay its bills.
Negative cash flow
When a business has more money going out than money coming in. In this situation, the business can not continue to pay its bills without borrowing money or raising additional capital.
Overdraft
An agreement with the bank to overspend on an account.
Overheads
The fixed costs that come from running an office, shop or factory, which are not affected by the number of specific products or services that are sold.
Positive cash flow
Positive cash flow is when more money comes in to the business than goes out.
Profits
The amount of money made after all costs are deducted.
Reporting period
A reporting period is the amount of time covered by a set of financial statements. The reporting period is typically either for a month, quarter or a year.
