Sources Of Finance (GCSE) Flashcards Preview

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Flashcards in Sources Of Finance (GCSE) Deck (14):
1

What is hire purchase

Hiring cars, equipment etc. they do not become property of the user until a final payment is made (bloom payment)

2

What is trade credit

Paying for stock after a period of time (usually 30 days) giving time for it to sell first

3

What is a grant

Money from the government which is given to a business for specific purpose. E.g cost of training employees

4

What is share issue

A source of finance used only by Plc or ltds. Finance is raised in return for a share in the business

5

Advantages of a grant

Interest free
No need to repay
Doesn't raise debt for business

6

Disadvantages of a grant

Has to be used for specific purpose
May not get the full amount required

7

Advantages of a lease

No need for deposit
Product is readily available
Maintenance may be covered in lease

8

Disadvantages of a lease

No ownership
Expensive
Cannot be used to raise finance in future

9

Advantages of retained profit

No interest
Nothing has to be repayed
No cost to raise the finance

10

Disadvantages of retained profit

Opportunity cost
Only available to business that make enough profit

11

Advantages of a loan

Repayment can be spread over time
Business knows how much they owe which helps budgeting and cash flow

12

Disadvantages of loan

Interest
Business may need to risk am asset as security

13

Advantages of cash in bank

No interest
Readily available
No debt risk

14

Disadvantages of cash in bank

Only available if there is cash in bank
Opportunity cost
Money can't be used for rainy days