Capital needed by an entrepreneur to set up a business
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Working capital
Capital needed to pay for materials day-to-day running costs, credits offered to customer
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Capital expenditure
The purchase of assets that are expected to last for more than 1 year. Ex: building, machinery
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Liquidity
The ability of a firm to pay its short-term debts
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Overdraft
Bank agrees to the business to borrow up to an agreed limit as and when required
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Hire purchase
An asset is sold to a company that agrees to pay fixed repayments over an agreed time period. The asset belongs to the company eventually
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Leasing
Obtaining the use of equipment or vehicle and paying a rental or leasing charge over a fixed period, ownership remains with the leasing company.
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Equity finance
Permanent finance raised by a company through the sale of shares
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Rights issue
Existing shareholders are given the right to buy additional shares at a discounted price
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Venture capital
Risk capital invested to business start-ups or expanding small business that have good profit potential but do not find it easy to gain finance from other sources.
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Microfinance
Providing financial service to poor or low-income customer who do not have access to banking service (loan, overdraft) from traditional commercial banks
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Crowd funding
The use of small amounts of capital by large amount of individuals to finance a new venture business
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Business plan
A detailed document giving evidence about a new or existing business, that aims to convince external lenders and investors to extend finance to the business
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Debt factoring
Selling of claims over trade receivables to a debt factor in exchange for immediate liquidity – only a proportion of the value of the debts will be received as cash.
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Other cards in this set
Card 2
Front
Capital needed to pay for materials day-to-day running costs, credits offered to customer
Back
Working capital
Card 3
Front
The purchase of assets that are expected to last for more than 1 year. Ex: building, machinery
Back
Card 4
Front
The ability of a firm to pay its short-term debts
Back
Card 5
Front
Bank agrees to the business to borrow up to an agreed limit as and when required
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