Business Studies Revision - Finances

Finances

The money is used for helping get started to build a business:

• Equipment 
• Staff
• Expand Business 
• Advertising
• Allowing to invest

Finances for large businesses:

Expanding a business requires funds which can be used for a number of purchases or expenses including :

• New machinery
• Additonal stock
• Resaearch and Development 

The main methods used are :

• Retained profit 
• New share issue
• Loan or mortgage
• Selling unwanted assests 

Retained Profit :

A internal source of finance that uses profit from previous years to reinvest in to the business.

New Share Issue:

A company with previously unissued shares can choose to issue these to raise cash in  return for share capital.

Loan or Mortgage:

Borrowing money from a bank or other financial institution. Loans can be short or long term whereas mortgages are long term and are secured agaisnt premises.

Selling Unwanted Assets:

A business will own items of value if these are no longer of use to the business they could be sold to raise funds.

Sales Revenue: Income that a business recieves from its sales (selling price x quantity)                                                          …