D) Sources Of Finance Flashcards
Retained profit definition
(Internal)
Profit kept in the business to fund future expenditure
Sale of assets
(Internal)
Selling an item of worth owned by a business in order to achieve an immediate cash injection
Net current assets
(Internal)
Current assets - current liabilities shows the money available in the business to fund day-to-day expenditure
Owner’s capital
Money invested in the business from the owners personal savings
Loans
Money borrowed from a financial institution normally for a set period of time and for a specific purpose
Crowd-funding
Investment from a large number of speculative investors many of whom may invest relatively small amounts
Mortgages
Long-term loans, around 25 years, that are secured against a specific asset e.g a building
Venture capital
Investment from an experienced entrepreneur in return for a stake (equity) in the business (dragons den!!)
Debt factoring
Selling on a business’s debt to a 3rd party in order to receive quick cash
Hire purchase
Paying a deposit then making regular payments, and when fully paid off, asset is owned by business
Leasing
arrangement in which a business pays to use land, a vehicle, etc. for a particular period of time, pays in instalments
Grants
A lump sum provided to a business by the government or another organisation for a specific purpose
Donations
Money given to a business from charities and other organisations
Trade credit
Business has use of goods immediately and pays supplier back 30-90 days later
Peer-to-peer lending
A form for people to lend or borrow money from one another without going through a bank
