Sources Of Finance

Question 1

sale of assets

Answer 1

Established businesses are able to sell off assets that are no longer required. E.g buildings and machinery

Question 2

debt factoring

Answer 2

business can raise cash by selling their outstanding sales invoices to a debt factoring company at a discount. short term source. useful for cashflow problems.

Question 3

retained profits

Answer 3

profits made at the end of the financial year reinvested back into the business to fund expenses.

Question 4

share issue

Answer 4

offering for sale of new shares of ownership in a business (available only to LTDs and PLCS)

Question 5

overdraft

Answer 5

bank allows its customer to take out more money than is in their account, high interest on it. short term use.

Question 6

loan

Answer 6

A loan is borrowing a fixed amount for a fixed period, with payments usually made monthly.

Question 7

trade credit

Answer 7

buy items and pay for them at a later date, usually 30-90 days later.

Question 8

leasing

Answer 8

business pays for the use of an asset or equipment but will never own the asset.