finance 0.0 / 5 ? BusinessfinanceA2/A-levelAQA Created by: cara123461Created on: 23-05-21 20:15 benefits of financial objectives provides direction, supports decisions, motivates employees 1 of 13 influences on finance objectives corporate and functional objectives, shareholders, competitors 2 of 13 cash flow problems if a business has liquidity (cash flow) problems it can become bankrupt as they lack short term cash to pay short term debts 3 of 13 how can cash flow be improved reducing the trade credit period to increase how quickly they get receivables, ask for longer trade credit until they have to pay their payables 4 of 13 internal sources of finance personal savings, selling assets, retained profit, 5 of 13 personal savings a downside is it can be risky to put a significant amount into the business, relevant for a start up business 6 of 13 selling assets (machinery), no interest, could harm a businesses operations 7 of 13 retained profit no interest, cheap, limited liability, might not be high enough to fund long term projects 8 of 13 external sources of finance trade credit (shorterm), bank loan/mortgages (longterm), hire purchases, can sell share capital 9 of 13 equity definition giving up a share of a business 10 of 13 venture capatalist someone who invests in expanding or new businesses where there is a high element of risk 11 of 13 challenges of increasing profitability reducing price may reduce quality, increasing price may deter customers 12 of 13 challenges of improving cash flow reducing trade credit period may reduce customer satisfaction, increasing trade credit period can cause tension between supplier and business 13 of 13
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