accounting
- Created by: abdul waheed shaikh
- Created on: 20-02-13 22:02
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- Business Finance
- Sources of finance in a limited company
- External
- Short term
- creditors
- factoring
- bank overdraft
- bank loan
- long term
- Share issue
- long term loans
- grants
- Debentures
- Medium term
- Leasing
- hire purchases
- medium term loans
- Short term
- Internal
- sales of assets
- Retained Profit
- reduction in working capital
- internal money raised from the business's own assets or from profits in the business
- does not have direct cost, does not increase liabilities or debts of the business,no risk of lost control by the original owner as no shares are sold
- External
- Key points
- liquidity
- revenue expenditure
- liquidation
- Capital expenditure
- overdraft
- bank agrees to a business borrowing up to an agreed limits as and when required
- Working capital
- factoring
- selling of claims over debtors to a debt factor in exchange for immediate liquidity- only a proportion of a value will be received as cash
- start up capital
- leasing
- Obtaining the use of assets and paying rental or leasing charge over a fixed period, this avoids the business with raising long term capital to buy assets
- hire purchases
- an assets sold to a company that agrees to pay fixed repayments over an agreed time period
- long term loans
- loans that do not have to be repaid for at least one year
- equity finance
- permanent finance raised by companies through sale of shares
- long term bonds and debentures
- bonds issued by companies to raise debt finance, often with a fixed rate of interest
- Sources of finance in a limited company
- rights issued
- Key points
- liquidity
- revenue expenditure
- liquidation
- Capital expenditure
- overdraft
- bank agrees to a business borrowing up to an agreed limits as and when required
- Working capital
- factoring
- selling of claims over debtors to a debt factor in exchange for immediate liquidity- only a proportion of a value will be received as cash
- start up capital
- leasing
- Obtaining the use of assets and paying rental or leasing charge over a fixed period, this avoids the business with raising long term capital to buy assets
- hire purchases
- an assets sold to a company that agrees to pay fixed repayments over an agreed time period
- long term loans
- loans that do not have to be repaid for at least one year
- equity finance
- permanent finance raised by companies through sale of shares
- long term bonds and debentures
- bonds issued by companies to raise debt finance, often with a fixed rate of interest
- Key points
- venture capital
- business plan
- detailed document giving evidence about new or existing business and that aims to convince external lenders to extend finance to the business
- business plan
- business plan
- risk capital invested in business startups or expanding small businesses that have good profit potentials but do not find it easy to gain finance from other sources
- venture capital
- venture capital
- external money raised from sources outside the business
- External
- Short term
- creditors
- factoring
- bank overdraft
- bank loan
- long term
- Share issue
- long term loans
- grants
- Debentures
- Medium term
- Leasing
- hire purchases
- medium term loans
- Short term
- External
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