Below are some examples of long term sources of Finance
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Share Capital
Money is invested into a company by shareholders. Shareholders gain a % of ownership and the owner may have to pay each shareholder a dividend. Not all profit is retained in the business
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Loans
Provided over a fixed period, lower rate of interest than bank overdraft, interest must be paid on top
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Retained Profit
Cash is generated by the business when it trades profitably. Can generate cash once trade begins
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Leasing
Renting equipment and/or premises, agreement of payment is between the leasee and the leasor
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Grants
Sum of money given for a certain project/purpose. No need to pay the money back.
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Short Term Sources Of Finance
Below you will find 3 examples of short term sources of finance
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Bank Overdraft
Lending money from the bank by drawing more money than is actually in the account. Interest is charged on the overdaw
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Trade Credit
Supplier usuallly allows a period of time before the payment for supplies is due. Can reatin cash for longer and enhance cash flow
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Factoring
Financing method where a business owner sell trade credit to a thrird party. Business sell the debt to others however it is for less money. E.g Business is owed £100m they can sell it to a factoring company for £90m
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Other cards in this set
Card 2
Front
Money is invested into a company by shareholders. Shareholders gain a % of ownership and the owner may have to pay each shareholder a dividend. Not all profit is retained in the business
Back
Share Capital
Card 3
Front
Provided over a fixed period, lower rate of interest than bank overdraft, interest must be paid on top
Back
Card 4
Front
Cash is generated by the business when it trades profitably. Can generate cash once trade begins
Back
Card 5
Front
Renting equipment and/or premises, agreement of payment is between the leasee and the leasor
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