business studies theme 2

Created by: sophieolivia1999
Created on: 23-01-18 15:33

Finance for Start Up Costs

Large one off payments like premises or equipment. Also, costs such as wages and raw materials until business is established.

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Finance for Depreciation

The loss in value of assets. when machinery runs out and needs replaced, building needs repairing etc.

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Finance for Day to Day

finance needed by the business to pay the bills daily. this is the additional finance (working capital) that is needed to cope wityh any cash flow problems.

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Finance for Expansion

Finance needed for physical expansion for extra productive capacity or increasing sales by launching into new markets with extra distribution or promotion costs.

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Working Capital

the cash needed by the business to cover day to day payments for inputs required for the production process

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Owners capital

Personal Savings / inheritance or redundancy. does not have to be repaid, no interest. however the owner risks losing everything. Best for starting a small business

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Retained Profit

The profit that remains after tax bills and dividends have been covered. belongs to the business, no need to repay and no interest. however, may not be enough to meet finance needs. Best for expanding a business.

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Sale of Assets

The sale of Land, property or machinery to raise finance that does not need to be repaid or carry interest charges. Only useful if business does not need assets. good for raising money quickly.

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Collaterel

assets that can be used to repay the lender in case the borrower does not have enough money to cover interest and repayments.

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Family and Friends

family and friends that may wish to help a business by lending money. may be flexible, offer loan without collateral, interest free and longer repayment period. however, problems may damage relationships, lenders may lose money,more involved.

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Banks

offer overdrafts for short term finance or loans for long term investment. fixed sum available. not flexible, require interest, collateral & difficult to persuade

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P2P Lending

allow servers to lend money direct to individuals/small businesses. gives borrowers access to funds at advantageous rates. finance restricted to small amounts and small businesses

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Business Angels

high net worth individuals

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Other cards in this set

Card 2

Front

The loss in value of assets. when machinery runs out and needs replaced, building needs repairing etc.

Back

Finance for Depreciation

Card 3

Front

finance needed by the business to pay the bills daily. this is the additional finance (working capital) that is needed to cope wityh any cash flow problems.

Back

Card 4

Front

Finance needed for physical expansion for extra productive capacity or increasing sales by launching into new markets with extra distribution or promotion costs.

Back

Card 5

Front

the cash needed by the business to cover day to day payments for inputs required for the production process

Back

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business studies theme 2