Sources of Finance

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What are some internal sources of finace?
Selling assets, owner funds, profit
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What is selling assets
how companies raise money by selling something it owns
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Is selling assets a short, medium or long term sollution
Short/medium
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What are owner funds?
Money put into the business by the owners (normally when it is first established) and is normally seen by sole traders and partnerships
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What are profits?
Moneyleft over after all the costs have been met
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Are profits a short, medium or long term solution?
Medium length
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What are some external sources of finance?
Loans, overdraft, hire purchase, leasing, government grants, venture capital, selling shares, debentures, factoring
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What is a loan?
Money borrowed from the bank or building society which is repayable over a long time
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Is a loan a short,medium or long term sollution?
Can be short or long term - interest will be charged
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What is an overdraft?
When a business is able to take more money from their bank account than is actually in there
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Is an overdraft a short, medium or long term solution?
Short term - interest has to be paid
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What is hire purchase?
When a business is able to pay fro an asset over a period of time
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Is hire purchasing a short, medium or long term solution?
Medium Solution
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What is leasing?
Allowing a business to use equiptment it doesn't own whilst paying an agreed charge
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Is leasing a short, medium or long term solution?
Medium
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What is a government grant?
financial help give the the business by the government
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Is it a short, medium or long term solution?
Long term (depending on how much money is given)
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What is venture capital?
Source of finance for businesses that may be considered a risky investment - Investors buy some shares in the business that are receicing the finance
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Is a venture capital a short, medium or long term sollution?
Long term
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What is selling shares?
When public, or private limited companies raise money buy selling shares in the business. Investors become part owner of the business and will receive deividends
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Are selling shares a short, medium or long term loan?
Long term
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What are debentures?
Long term
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Are debentures a short, medium or long term solution?
Long term
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What is factoring?
Allows you to raise finance based on the value of the outstanding invoices
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Is factoring a short, medium or long term fix?
Short term
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Other cards in this set

Card 2

Front

What is selling assets

Back

how companies raise money by selling something it owns

Card 3

Front

Is selling assets a short, medium or long term sollution

Back

Preview of the front of card 3

Card 4

Front

What are owner funds?

Back

Preview of the front of card 4

Card 5

Front

What are profits?

Back

Preview of the front of card 5
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