Topic 6- Fiance

Question 1

What is finance?

Answer 1

The capital needed to start up and run a business.
For:
-Rent
-Vehicles/ machinery
-Advertising
-Stock
-Market research
-To expand

Question 2

What is internal and external source of finance?

Answer 2

Capital found with in a business.
Capital found outside the business.

Question 3

What are factors that influence the SOF chosen?

Answer 3

• Amount of personal finance available
• How much needed
• How risky the business is judged to be

Question 4

What is breakeven and why is it important?

Answer 4

The level of production at which a businesses total costs is exactly equal to total revenue.
Total revenue= total costs
Why is breakeven important?
Plan for the future
Try to increase sales/ revenue
Decrease costs e.g cheaper suppliers, sell assets.

Question 5

What is cash flow?

Answer 5

Is the amount of money moving in and out of a business on a day to day basis.
What is it’s important?
Pay suppliers
Pay workers
Ensure cash is coming in before going out
Enables business not to borrow
Reduces risk of failure