1.4.1 - 1.4.3 Flashcards
Banks
A financial institution licensed to receive deposits and make loans
Working capital
A measure of a company’s operational efficiency and short term financial health
Collateral
An asset that can be seized by the lender if the borrower stops paying
Risk
The possibility that an idea does not become a success as planned
Financial intermediaries
Offers link between investors and savers
Often a bank
Unlimited liability
Can lose personal assets to repay debts
Sole trader
Limited liability
Only business assets used to repay debts
Private/Public Limited Company
Private limited companies
Records do not need to be published to the public
Public limited companies
Records must be able to be accessed by public
Must raise £50,000 to begin business
Internal finance
Using the business’s money to pay for something
Doesn’t involve interest or dividends
Retained profit
Profits that are not distributed to shareholders but are reserved to complete specific objectives
Sale of assets
Compensated distribution of valuable property that can be tangible/intangible
External finance
Seeking finance from other organisations or individuals
Involves interest/dividends
Ordinary share capital
Money invested in the company by shareholders
Equities
Taxation or welfare fairness
