Unit 1 Investigating Small Business Sources of Finance Flashcards
Trade Credit
Where a supplier gives a customer a period of time to pay a bill (or invoice) for goods or services once they have been delivered
Stocks
Materials that a business holds. Some could be materials waiting to be used in the production process and some could be finished stock waiting to be delivered to customers.
Business Plan
A plan for the development of a business giving forecasts such as sales, costs and cash flow
Long term finance
Sources of money for businesses that are borrowed or invested typically for more than a year
Short term finance
Sources of money for businesses that may have to be repaid with immediately or fairly quickly, such as an overdraft, usually within a year.
Personal Savings
Money that has been set aside and not spent by individuals and households.
Share Capital
The monetary value of a company which belongs to its shareholders, for example, if five people each invest £10,000 into a business, the share capital will be £50,000
Shareholders
The owners of a company. They are the people who buy company shares and expect a dividend in return for their investment
Venture Capitalist
An individual or company which buys shares in what they hope will be a fast growing company with a long term view of selling the shares at a profit. eg “The Dragons” on Dragons den
Loan
Borrowing a sum of money which has to be repaid with interest over a period of time, such as 1-5 years.
Security (or collateral)
Assets owned by a business which are used to guarantee repayments of a loan; if the business fails to pay off the loan, the lender can sell what has been offered as security.
Mortgage
A loan where property is used as security.
Dividend
A share of the profits of a company received by shareholders who own shares.
Retained Profit
Profit which is kept back in the business and used to pay for investment in the business.
Leasing
Renting equipment or premises.
