Booklet 7:Sources Of Finance Flashcards
(18 cards)
What is Owner’s investment? (4)
Owners use their private money and invest it in the business
What is Retained profit? (4)
Businesses can use profits from the current trading year or profits from previous years .
What is Sale of assets? (4)
Firms sell assets they no longer require and these are normally non current assets.
What is Debentures? (4)
Debentures are long term loans that are useful for projects that will take a long time to generate returns.
What is Bank Loans? (4)
Used for medium to long term usually for the purchase of non-current asset.
What is Mortgages? (4)
A mortgage is a long term loan for the purchase of a property or land.
What is Bank overdraft? (4)
Overdrafts are flexible source of finance and mean a business can spend more money than they have in their bank account within a set limit.
What is Hire Purchase? (4)
Paying for an item in instalments over a period of months or years.
What is Leasing? (4)
Allows a business to obtain assets without the need to pay a large lump sum upfront.
What is Sale and leaseback? (4)
Firms will sell valuable assets and lease them back again.
What is Factoring? (4)
When a factoring company buys the right to collect the money from the credit sales of a business.
What is Trade Credit? (4)
Making use of an opportunity offered to defer payment to a supplier; buy now and pay later without paying any interest charges.
What is Venture Capital? (4)
Finance that is provided to small or medium firms that seek growth but which may be considered as risky by typical share buyers or other lenders. It is a mix of loan and share capital so those that provide it often have some control over the organisation.
What is Crowdfunding? (4)
Usually carried out online where businesses outline the details of their business and projects and invite people to provide funding.
What is Ordinary Shares? (4)
Ordinary shares capital is money given to a company by shareholders in return of a share certificate that gives them part ownership of the company.
What is Preference Shares? (4)
Shares in a company which give their holders an entitlement to a fixed dividend.
What is Business Angels? (4)
Informal investors who are looking for a new and growing business in return for a share of the equity.
What is Government funding? (4)
Businesses can obtain grants from the government. A grant usually doesn’t have to be paid back.
