The money that the owner(s) have available to put into the business.
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What is Retained Profits?
All the money that is left after all deductions are taken away from total revenue i.e. tax and dividends paid to any shareholders. It can be re-invested into the business. (Good for expansions)
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What is Sale of Assets?
The business sells assets (things with value i.e. vehicles/machinery) in order to raise money. The business often leases the items in the future.
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Advantages - Internal Sources of Finance
Costs less than external sources. Less interest.
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Trade Credit?
The period of time allowed by a business after supplying another business with the goods/services before payment is due, usually 30 days. In this time businesses can use the money internally before paying the bill.
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Overdraft?
Banks allow you to spend a certain amount over what you actually have in your account. Good for cash flow.
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Leasing?
Basically borrowing assets over a long period of time. (Machinery/Vehicles)
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Hire Purchase?
Similar to leasing although, the business owns the asset/s at the end of the agreement.
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Loan?
The use of someone else's money for a period of time, it usually involves regular repayments and with interest.
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Venture Capital?
(Dragons' Den) funding via specialist firms of individuals. Often when it would be too risky. Venture Capitalist want a lot of interest or some Equity
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Share Capital?
Finance raised by selling shares in company. Only for limited companies (PLC, LTD)
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Debenture?
A business will take a long term loan often secured on the company's property. Business equivalent of a mortage.
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