raising finance 2.1 Flashcards Preview

A LEVEL BUSINESS > raising finance 2.1 > Flashcards

Flashcards in raising finance 2.1 Deck (20)
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1
Q

internal sources of finance

A

retained profit
sales of assets
owners capital

2
Q

external sources of finance

A

family and friends
banks
business angels
crowdfunding

3
Q

external methods of finance

A
loans 
share capital
venture capital 
overdrafts
leasing
grants
4
Q

crowdfunding

A

many small investments from a web based appeal

5
Q

venture capital

A

investment from an established business into another business in return for a percentage of equity in the business

6
Q

share capital disadvantages

A

loss of ownership

threat of takeover

7
Q

overdraft

A

the facility to overspend on a current account up yo an agreed sum - with high interest payments

8
Q

leasing

A

paying for an asset in multiple instalments - the item is still the leasers property until the last payment

9
Q

trade credit

A

paying supplies a period of time after goods and services have been received

10
Q

grants

A

fixed amounts of capital provided by governments usually to benefit the environment around a specific location e.g. increase employment

11
Q

limited liability

A

if the business fails owners only lose what they have invested; personal belongings are not at risk

12
Q

unlimited liability

A

owners are responsible for total debts and personal items are at risk of being seized

13
Q

what does a business plan include?

A
  • products and services for sale
  • market size, share and competitors
  • strategy
  • operations and financial forecasts
14
Q

purpose of a business plan?

A

secure external funding e.g. banks
identify future problems to prepare
keep on track of targets

15
Q

cash inflows

A

cash sales
owners capital
sales of assets
bank loans

16
Q

cash outflows

A
purchasing stock/materials
wages
debts
creditors
buying assets
17
Q

cash flow forecast

A

forward looking statement attempting to predict future inflows and outflows

18
Q

cash flow statement

A

backward looking statement showing what happened to inflows and outflows

19
Q

net cash flow

A

inflows - outflows

20
Q

opening balance

A

how much the business starts off with at each new month

the closing balance for one month will be the opening balance for the next