Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Business > Unit 3 > Flashcards

Unit 3 Flashcards

1
Q

Capital expenditure

A

finance spent on fixed assets such as building, machinery, equipment etc.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Revenue expenditure

A

Finance spent on the daily running of a business such as wages, raw materials, insurance, bills etc.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Name the types of internal sources of finance

A

Personal funds, retained profits and sale of assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Personal funds

A

personal savings/ money from family and friends

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Sale of assets

A

Selling unnecessary equipment and/ or premise

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Retained profits

A

Profits which remain/ are reinvested after all dividends and costs are paid

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Advantages and disadvantages of Personal funds

A

Advantages: no interest rate, full control, easy access
Disadvantages: insufficient, risky

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Advantages and disadvantages of retained profits

A

Advantages: No interest rate, full control
Disadvantages: Not available to startups, insufficient

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Advantages and disadvantages of sale of assets

A

Advantages: no interest rate, full control
Disadvantages: insignificant and takes a long time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

When would personal funds be suitable

A

Unlimited liability companies such as sole traders and partnerships

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

When would retained profits be suitable

A

Limited liability organizations that can retain profits without upsetting shareholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

When would sale of assets be suitable

A

When a business is about to shut down or relocate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Name 5 external sources of finance

A

Any 5 of these: Share capital, loan capital, overdrafts, trade credit, crowdfunding, leasing, microfinance providers and business angels

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Share capital

A

funds raised through the sale of shares

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Loan capital

A

Finance obtained from commercial lenders (bankers)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Overdrafts

A

when a business uses more money than it has in its account

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Crowdfunding

A

Obtaining a small amount of money from a large group of people

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Trade credit

A

Opportunity to back back the creditor at a later date (“buy now pay later”)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Leasing

A

When a lessee hires an asset from a lessor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Microfinance provider

A

An organization that provides microcredit to low-income individuals/ businesses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Business angels

A

Wealthy individuals who invest in a business with high growth potential

22
Q

Advantages and disadvantages of share capital

A

Advantages: large sum of money with no interest
Disadvantages: loss of control, bureaucracy and requirement to pay dividends

23
Q

Advantages and disadvantages of Loan capital

A

Advantages: no loss of control
Disadvantages: interest rate, required collateral

24
Q

Advantages and disadvantages of overdrafts

A

Advantages: easy to acquire
Disadvantages: high interest rates

25
Q

Advantages and disadvantages of trade credit

A

Advantages: Business has time to process raw materials and pay back the creditor
Disadvantages: if payments are late, businesses can be charged with a fee

26
Q

Advantages and disadvantages of crowdfunding

A

Advantages: market research, advice from potential investors, no risk, can be rewarding
Disadvantages: commission fee, a lot of competition

27
Q

Advantages and disadvantages of microfinance providers

A

Advantages: accessibility to finance for the impoverished, creation of jobs
Disadvantages: unethical lending practices, limited eligibility, limited sums of finance, high interest rates

28
Q

Advantages and disadvantages of leasing

A

Advantages: no maintenance, lower tax, business expense
Disadvantages: no ownership rights and is way more expensive in the long run

29
Q

Advantages and disadvantages of business angels

A

Advantages: No interest rates
Disadvantages: loss of control, high competition, not common/ hard to find

30
Q

Where would Share capital be most suitable

A

Limited liability organizations that have shares (publicly and privately held companies)

31
Q

Where would loan capital be most suitable

A

When a large sum of money is needed in exchange for long term payments

32
Q

Where would overdrafts be most suitable

A

When there are minor cash flow issues

33
Q

Where would Trade credit be most suitable

A

When there is a good relationship between the business/ debtor and the supplier/ creditor

34
Q

Where would crowdfunding be most suitable

A

when a small business has no start-up capital but has outstanding business ideas

35
Q

Where would leasing be most suitable

A

when the business needs an asset for a short amount of time but cannot afford to purchase it

36
Q

Where would microfinance providers be most suitable

A

In less developed economies with businesses that do not have access to finance from traditional lenders

37
Q

Where would business angels be most suitable

A

when there are businesses that have a high growth potential

38
Q

Name the short term sources of finance

A

Personal funds, retained profits, overdrafts (sale of fixed assets, trade credit and crowdfunding)

39
Q

Name the long term sources of finance

A

Share capital, Business angels, Loan capital, Debentures, leasing (sale of fixed assets, trade credit and crowdfunding)

40
Q

Debenture

A

Long term loans issued by a business

41
Q

examples of loan capital

A

Mortgages, debentures, bank loans etc.

42
Q

Gearing ratio

A

borrowing as a percentage of its total capital employed

43
Q

Hire purchase

A

When you pay for an asset in instalments and claim ownership once the last payment is made

44
Q

Sale and leasback

A

when you sell some of your assets and immediately lease the assets you just sold

45
Q

What is the duration of something labelled as “short-term”

A

In the next 12 months (less than a year)

46
Q

what is the duration of something labelled as “long-term”

A

1-5 years +

47
Q

What are MNCs

A

Multinational companies are companies that operate in two or more countries or is legally registered in two or more countries

48
Q

What is a host country

A

Any country which allows an MNC to set up on its territory

49
Q

Reasons companies become MNCs

A

Increased customer base, cheaper production costs, global EOS, Spreading risks, avoiding protectionism

50
Q

Globalization

A

a trend/ process of integration of local economies into one global economy, whereby companies, organizations and people think globally but act locally.

51
Q

name 5 Impacts of globalization

A

cultural diversity, level of competition, ability to meet customer expectations, number of customers, EOS, external growth opportunities, more sources of finance.

Business (3 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions