5. Sources of finance Flashcards
(43 cards)
In not for profit (NFP) organisations, what are the three E’s that often used instead?
- Effectiveness
- Economy (reduction of cost)
- Efficiency
A performance measure is only useful if what?
If compared with something else
Define critical success factors (CSFs)
Product features that are particularly valued by a group of customers, and therefore, where the organisation must excel to outperform the competition
One way of setting Key Performance Indicators is to use benchmarking- how is this defined?
The establishment, through data gathering, of targets and comparators, through who use relative levels of performance can be identified
Beyond financial performance reporting frameworks, accountants can use the triple bottom line of SEE factors. What does this stand for?
Social
Environmental
Economic
What does GRI stand for?
Global reporting initiative
What is the Natural Capital Protocol?
A standardised framework for businesses to use, developed by the Natural Capital Coalition, when assessing natural capital
What is the CDSB framework?
The Climate Disclosure Standards Board framework is for ensuring that information about natural capital is given the same prominence as financial capital in a company’s reports
What does CSR stand for?
Corporate Social Responsibility
What is a balanced scorecard?
An integrated set of performance measures linked to achievement of strategic objectives
From what four perspectives does the balanced scorecard look at?
- Customer
- Internal business processes (e.g. product quality)
- Innovation and learning (e.g. employee retention rates)
- Financial (e.g. gross margin)
Debt holders face ______ risk but ____ returns on their capital
Lower, lower
Equity holders face ______ risk but ____ returns on their capital
Higher, higher
What is financial intermediation?
State a benefit of it
Where banks take deposits from customers and then use those funds to lend money to other customers
- Small amounts deposited by savers can be combined to provide larger loan packages to businesses
- Short-term savings can be transferred into long-term borrowings
- Search costs are reduced as companies seeking loan finance can approach a bank directly rather than finding individuals to lend to them
- Risk is reduced as an individual’s savings are not tied up with one individual borrower directly
What does EFT stand for?
Electronic Funds Transfer
What does CHAPS stand for?
What items does it cover?
Clearing House Automated Payment System
It covers items of at least £10,000 and provides same-day clearing
What does SWIFT stand for?
Society for Worldwide Interbank Financial Telecommunication
What is the aim of monetary stability?
To meet a target for overall inflation in the economy
What two authorities does the Bank of England use to ensure the financial stability of the UK’s financial system?
- Financial Policy Committee (macro prudential responsibility)
- Prudential Regulation Authority (regulation of firms)
What is the difference between primary banks and secondary banks?
Primary bank: those which operate the money transmission service in the economy, operating cheque accounts and deal with cheque clearing
Secondary bank: made up of merchant banks and other banks, which do not take part in the clearing system
What are a customer’s two duties to the bank?
- Draw up cheques carefully to avoid facilitating fraud
2. Report known forgeries to the bank
Does the bank have a right to use the customer’s money in any way provided that it is legal and morally acceptable?
Yes
Define marketable securities
Short-term, highly liquid investments
What is the minimum investment for a treasury bill?
£50,000
