Start up capital, To finance working capital ,To take over another firm, To invest in research and development
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What is Working Capital?
The capital needed to pay for raw materials, day to day running costs and credit offered to customers
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What is meant by "Liquidation"?
It means when a firm ceases trading and its assets are sold for cash to pay suppliers and other creditors
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How much working capital is needed in a business?
The longer the time period from buying materials to receiving payments from customers, the greater amount of working capital is needed
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What is capital expenditure?
The purchase of assets that are expected to last for more than one year such as, building and machinery
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What is revenue expenditure?
Spending on all costs and assets other than fixed assets which includes wages and salaries and materials bought for stock
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What is bank overdraft?
When a bank agrees to a business borrowing up to an agreed limit as and when required
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What is debt factoring?
Selling of claims over trade receivables to a debt factor in exchange of immediate liquidity-only a proportion of the value of the debts will be received in cash
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What is hire purchase?
An asset is sold to a company that agrees to pay fixed repayments at an agreed time period- the asset belongs to the company
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What is Leasing?
Obtaining the use of equipment or vehicle and paying a rental charge over a fixed time period
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What is equity finance?
Permanent finance raised by the companies through the sale of shares
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Long term loans
Loans that do not have to be repaid for more than one year
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What are Debentures?
Bonds issued by companies to raise debt finance, often with a fixed rate of interest
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What is venture capital?
Risk capital that is invested in busines start ups or expanding a small business that has good profit potential but do not find it easy to gain finance from other sources
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What is "Microfinance"?
Providing financial services for poor and low income customers who do not have access to bank overdrafts and loans offered by traditional commercial banks
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What is crowd funding?
The use of small amounts if finance from large number of individuals to finance a new business venture
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What are the factors that influence finance choice?
Cost, Amount required, Size of existing borrowing, Legal structure and Desire to retain control
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Other cards in this set
Card 2
Front
What is Working Capital?
Back
The capital needed to pay for raw materials, day to day running costs and credit offered to customers
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