Unit 3 Flashcards
Internal sources of finance
Finance that comes from within the business
Retained profits
The surplus funds reinvested into the business.
Sale of Assets
A business can sell assets that no longer serve a significant purpose to the business.
External sources of finance
refers to the funds invested into the business that are secured from outside of the business.
Share capital
The funds generated from the sale of shares. Prominent source of income in companies specifically public limited companies.
Loan capital
The funds acquired through a loan process, typically from financial institutions such as banks
Overdraft
Is a financial service that allows a business to withdraw more money than the existing funds within its bank accounts.
Overdraft
Is a financial service that allows a business to withdraw more money than the existing funds within its bank accounts.
Trade credit
allows a business to acquire goods and services from suppliers without having to pay upfront.
Grants
A sum of money given to a business by the government.
Subsidies
a sum financially covered by the government, in order to relieve production costs and encourage product.
Debt factoring
is when a debt factor (a business) takes over the debtors of other businesses.
Leasing
is when a fixed amount is agreed upon between two businesses that is paid for access to an asset owned by one business over a period of time.
Venture capital
When a typically large organisation invests in smaller business that present growth potential, through loans and share capital.
Business Angels
Wealthy Individuals who take the risk of investing personal finances into businesses on the hope of a return on investment.
