Sources of Finance

Question 1

name some short term sources of finance

Answer 1

overdraft
trade credit
factoring

Question 2

name some long term sources of finance

Answer 2

owners savings
bank loans
debentures
mortgage
hire purchase
government grants

Question 3

what is an overdraft facility?

Answer 3

where a bank allows a firm to take out more money than it has in its bank account

Question 4

what are trade credits?

Answer 4

where suppliers deliver goods now and are willing to wait for a number of days before payment

Question 5

what is factoring?

Answer 5

where firms sell their invoices to a factor such as a bank. They do this for some cash righy away, rather than waiting 28 days to be paid the full amount

Question 6

what are the owners savings called in a plc/ltd?

Answer 6

share capital

Question 7

what are debentures?

Answer 7

loans made to a company

Question 8

name some internal sources of finance

Answer 8

owners investment
retained profits
sale of stock
sale of fixed assets
debt collection

Question 9

name some external sources of finance

Answer 9

bank loan
overdraft
partnership
share issue
leasing
hire purchasing
mortgage
trade credit
grant

Question 10

what are the disadvantages and advantages to using owners investment?

Answer 10

:) doesnt have to be repaid and no intrest payable

:( most people dont have lots of money availabe to invest in their own business