Module 4 - Sources Of Finance Flashcards
(12 cards)
What is issued share capital?
Number of shares the company issues
What is a share placing?
When shares are not offered to the public but to the private clients of the issuing house at a fixed price.
What is an offer for sale?
The company/ shareholders invite the general public and institutions to buy shares in a company.
Offer for Subscription
The general public are invited to buy shares, however it is stated that if the share does not raise enough money the offer for subscription can be cancelled
What is a rights issue?
Existing share holders are offered shares based on the shares they currently hold.
This is done before either of the other options, however can not be done to bring shares to the market for the first time.
State three facts about preference shares
- Get paid back before ordinary share holders
- Price is usually fixed.
- No guarantee dividend will be paid
State four conditions that can be attached to preference shares:
- Cumulative
- Redeemable
- Covertability
- Participation - can sometimes get an extra dividend.
What is the bond principle?
Initial amount paid for a bond - usually £100
What is a bond security?
The bond will usually be secured by a fixed charge on a specific asset or a floating charge over specified assets of the company.
Describe ownership in a hire purchase scheme:
Whilst payments are being made the item belongs to the hire purchase company, and at the end of the term the ownership passes to the hiree
Name two short term sources of finance:
1: Overdraft
2: Bills of Exchange - a discount house can be used here to get payment.
What services does a factor provide?
1: provision for finance - boosts cash flow
2: sales ledger administration
3: credit insurance
