U1 AOS2/KK7: Sources of finance

Question 1

internal

Answer 1

within the business that have direct impact on business. owners have most control over eg. retained profit

Question 2

external

Answer 2

outside the business from private companies individuals and government eg, bank loans, debt factoring

Question 3

short term

Answer 3

repayment within 12 months

Question 4

long term

Answer 4

repayment 3+ YEARS

Question 5

internal exampkes

Answer 5

retained profits (S+L)
owner savings (S+L)
sale of assets (L)

Question 6

external eg

Answer 6

debt factoring (S)
overdrafts (S)
sharecapital (L)
loans (L)
venture capital (L)
crowd funding (L)

Question 7

owner savings

Answer 7

(S+L) $$ injected into bus from owners own pockets

Question 8

retained profits

Answer 8

(S+L) a profit kept and reinvested from prev years success

Question 9

sale of assets

Answer 9

(L) items a bus owns and uses repeatedly for 1+ yr in main operations eg machinery and vehicles
- if a firm wishes to free up finance they could agree to sell asset then lease ti back from its new owner for an agreed period of time (SALE AND LEASEBACK)

Question 10

debt factoring

Answer 10

(S) service were bus sells its debts which have not been collected from another company (invoices) to a 3rd party at a discount, in exchange for immediate $$

Question 11

overdrafts

Answer 11

(S) allows a bus to overspend on its current account to an agreed limit

Question 12

share capital

Answer 12

(L) $$ given to a company by private individual in exchange for a share certificate giving them part ownership in the limited company

Question 13

loans

Answer 13

(L) a sum provided to an ind/bus for an agreed purpose

Question 14

LOANS

mortgage
debenture

Answer 14

mortgage - long term loan (20-30years) taken out on property lower interest rates than other loans
debenture - long term loan w fixed interest rate

Question 15

venture capital VC

Answer 15

(L) $ prov to a S-M sized bus that seek growth to initial investment and may be considered as a risky investment by share buyers or banks

Question 16

crowd funding

Answer 16

(L) method of raising $$ by asking a LG # go ppl each for a SML # $$ often via internet