Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Business - Finance > Influences of Financial Management > Flashcards

Influences of Financial Management Flashcards

(54 cards)

Start Studying
1
Q

Finance

A

Businesses require funds to perform many of their business activities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Internal Finance

A

Funds provided by the owners of the business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Examples of Internal Finance

A

Owner’s Equity & Retained Profits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Owner’s Equity

A

The funds contributed by the business owners to establish & build the business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Retained Profits

A

Using the profits of a business to fund activities or to keep as spare cash for unforeseen circumstances

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

External Finance

A

Funds provided outside a business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Examples of External Finance

A

Banks, Investors, Government

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Debt Financing

A

Obtaining funds through lenders & creditors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Advantages of Debt Financing

A

Quick Access to Cash

Ownership is retained

Increased Credit Score

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Short-term Borrowing

A

Finance smaller matters such as stock, borrowed for periods less than 12 months

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Examples of Short-term borrowing

A

Bank Overdraft

Commercial Bills

Factoring

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Overdraft

A

withdrawing more money than a business/individual has for a specific time, to overcome a temporary cash shortfall

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Commercial Bills

A

a type of short-term loan that is used for large amounts (+$100,000), that is to be repaid within 30-180 days

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Factoring

A

The selling of accounts receivable for a discounted price to a finance company, in return, the business will receive cash immediately

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Long-term Borrowing

A

Finance larger matters such as equipment and plants, borrowed for periods longer than 12 months

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Examples of Long-term borrowing

A

Mortgage

Debentures

Unsecured Notes

Leasing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Mortgage

A

A loan secured by the property of the borrower

regular payments over a period of time including principal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Debentures

A

A promise to repay the money w/ regular interest for a defined term

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Unsecured Notes

A

a loan for a set period of time, not secured by collateral or assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Leasing

A

Payment of money for the use of equipment, that is owed by another party

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What are the two different types of leasing?

A

Operating Lease & Financial Lease

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What are the Advantages of Leasing?

Study These Flashcards
A

Tax deductible

Payments incl. maintenance, insurance and financial costs

23
Q

What are the Disadvantages of Leasing?

Study These Flashcards
A

Increased interest rate

A business may pay more than what the asset is valued (when not bought outright)

24
Q

Operating Lease

Study These Flashcards
A

A contract that allows the use of an asset, but does not pass on the ownership rights to the business using the assets

25
Financing Lease
A contract where the business is the legal owner of the asset for the duration of the lease
26
Features of Operating Leases
Short Periods The owner carries out maintenance Can be cancelled (Example: Delivery Vehicles for busier seasons -> ice-cream trucks)
27
Features of Financial Leases
The lessor purchases assets for the lessee Penalties for breaking agreement Cheaper than operating leases The lease is usually the life of the asset
28
Equity Finance
The finance raised by a company issuing shares
29
Ordinary Shares
Shares that are issued & sold through the Australian Securities/Stock Exchange (ASX)
30
Dividends
A distribution of a company's profit to shareholders, calculated as a number of percent per share
31
What are the four variations of shares?
New issues Rights issue Placements Share purchase plan
32
New Issue / Initial Public Offering (IPO)
Shares that have been issued and sold for the first time on the public market (ASX) - also known as primary shares / new offerings
33
Rights Issue
Privilege granted to shareholders to buy more shares in the same company at a special price
34
Placements
Allotment of shares that are offered at a special discount to their usual trading value to persuade special institutions and investors
35
Share Purchase Plan
An offer to existing shareholders in a listed company the opportunity to purchase more sales (max. of $500) in that company WITHOUT fees
36
Private Equity
The sales of shares to raise finance for a private company, that is not listed in the ASX
37
Financial Institutes
Sources of finance for businesses
38
Banks
Main source of funds for businesses in Australia
39
Investment Banks
Dealing with the business sector -> purchase of stocks in the financial market
40
Finance Companies
Provide short/medium-term loans to businesses by: personal loans secured loans
41
Life Insurance Companies
Provide cover & lump sum payment in the event of a person's death in exchange for regular payments
42
Superannuation Funds
Government scheme where employers have to make a financial contribution towards the retirement funds of their employees Aged between 18-69 & make +$450/month before tax
43
Unit Trusts
Funds are taken from a large # of small investors to be invested in financial assets such as property, shares and commodities
44
Australian Securities Exchange (ASX)
A market where shares are bought and sold in Australia
45
What are the two markets the ASX operates at?
Primary & Secondary Market
46
Primary Market (ASX)
Enables companies to raise capital through an initial offering of shares
47
Secondary Market (ASX)
Where second-hand shares are traded between investors
48
Australian Securities & Investments Commission (ASIC)
Independent federal government body that regulates and monitors activities to ensure that relevant corporate laws are being followed Corporation Act 2001
49
Company Taxation
Tax paid on profits made by private or public companies -> 30% of net profit Decreased overtime for incentive for economic growth
50
Global Economic Outlook
The projected changes to the level of economic growth throughout the world
51
Positive Economic Outlook
Increase in demand for products and services Decrease in interest rates on funds borrowed
52
Negative Economic Outlook
Decrease in demand for products and services Increase in interest rates on funds borrowed
53
Availability of Funds
The ease with which businesses can access funds from the international financial markets
54
Interest Rates
The cost of borrowing money

Business - Finance (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions