SOURCES OF FINANCE Flashcards
What is an asset?
An item of property owned by a person or company.
What is cash flow?
The movement of money in and out of the business.
What is the cost of borrowing?
Cost of borrowing is the interest charged on a bank loan.
What is a credit arrangement?
A credit arrangement is a contract made between a business and a supplier. It outlines when payments must be made.
What is a credit check?
A credit check is when a company looks at the financial information held on a business or an individual to determine whether they are creditworthy (eg suitable to lend money to) and reliable.
What is crowdfunding?
Crowdfunding is raising money from a large number of people who contribute small amounts, usually online.
What are dividends?
A sum of money paid regularly by a company to its shareholders out of its profits.
What is an entrepreneur?
A calculated risk-taker who sets up a business in return for financial gain.
What is a founder?
A business founder is an individual or group of individuals who create a business.
What is a guarantor?
A person who guarantees a loan or payment. If the person or business taking out the loan does not pay, the guarantor pays instead.
What is an investment return?
The amount of money that is received in return for investing in a business.
What are ordinary shares?
A share of a company entitling its holder to dividends which vary in amount depending on whether the company has a good or bad year.
What is an overdraft?
An agreement with the bank to overspend on an account.
What is permanent capital?
Permanent capital is a source of finance that never has to be paid back.
What is share capital?
The money raised when a business becomes a public limited company by offering shares in the business in return for capital.
