Theme 2.1 (knowledge) Flashcards
What is collateral?
Something of value that is used as security when a loan is offered. If the business is unable to pay back the loan, the asset is transferred to the bank for repayment.
What is Venture capital?
A method of providing finance through higher risk investments in return for shares.
What is an overdraft?
Where a bank will allow a customer to continue spending even when their account becomes negative.
What is Leasing?
An alternative to buying the asset outright. Instead, the asset is leased for a monthly fee for a set period of time.
What is Trade Credit?
Goods or services provided by a supplier that are not paid for immediately.
What is a Business Angel?
Individuals who invest in the early stage of a business, taking a significant equity share
What is Crowdfunding?
Obtaining finance from many small investments, usually through a web-based appeal for investors
What is Liquidation?
When a company’s owners close down the company, selling off its assets to generate cash to pay off debts of the business.
What is a Business Plan?
A document setting out a business idea and how it will be financed, marketed and put into practice.
What is Share capital?
Business finance that has no guarantee of repayment or of annual income but gains a share of the control of the business and its potential profits
What is a creditor?
Those owed money by the business - i.e supplier or bankers.
What is Bankruptcy?
Owners are not liable for any debts incurred by the business, some or all of which can be a consequence of the businesses activities
What is Limited Liability?
Owners of a business are not liable for the debts of the business; they can lose no more than the sum invested
What is Unlimited Liability?
Owners are liable for any debts incurred by the business, even if it requires them to sell all their assets and possessions and becomes personally bankrupt
What is a Public Limited Company? (PLC)
A company with limited liability and shares, which are available to the public. It’s shares can be quoted on the stock market.
