Unit 3: Financial Flashcards
capital expenditure
spending on a company’s fixed assets
fixed asset
asset kept for over 1 year
examples of capital expenditure
factories, tech, production equipment and vehicles
revenue expenditure
spending on a company’s general operational costs
examples of revenue expenditure
utility bills, wages, paying suppliers, repaying debt, taxes
3 types of internal sources of finance
personal funds
retained profit
sale of assets
sale of assets
selling its (fixed) assets
personal funds
owner investing own money
risky
receive shares in return
retained profit
money company has left at end of trading period
short term finance
repaid within 12 months
medium term finance
repaid within 1 and 5 years
long term finance
repaid in over 5 years
3 types of external sources of finance
equity finance
debt finance
others
equity finance
outside investor receives part ownership (shares) in exchange for finance
3 types of equity finance
business angel
venture capital
share capital
business angel
successful business person who invests their money into new businesses
venture capital
financing that pools resources from a group of investors to fund a new project/company
share capital
money raised through selling shares in stock market
debt finance
money borrowed from a bank or another financial institution
types of debt finance
overdraft, loan capital, microfinance, trade credit
loan capital
business receives a loan and offers collateral
overdrafts
business can loan/ take out more than what they have in the bank
microfinance
providing financing to people with very limited income and assets, who aren’t able to get services from traditional banks
microcredit
small loans that enable someone to start and continue a small business