4775021
Description
Flashcards by Charlotte Summerly, updated more than 1 year ago
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Created by Charlotte Summerly
about 8 years ago
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| Question | Answer |
| Why is finance important? | - Finance department to manage costs between each part of the firm - Pay staff - To operate and keep the firm going |
| What is it needed for? | - Manage stock - Operate - Start up - Expand - Pay staff |
| What is a source of finance? | - a method of gaining finance - where money comes from - money to fund the business |
| Where can money come from? | - Retained profit - Revenue - Family and friends - Business angels - Bank - Crowd funding - Other businesses |
| Methods of finance | - Owners capital - Retained profits - Loans - Share capital - Overdrafts - Venture capitalists - Trade credit - Grants - Sale of assets - Leasing |
| Overdrafts | Benefits; - immediate - always there to use Limitations; - had to be paid back - could always be paying it back |
| Venture capitalists | Benefits; - can gain a lot from the individual Limitations; - capitalist will require a reward from the business |
| Leasing | Benefits; - consistent income - can always lease something Limitations - never own the asset - only short amount of time |
| Trade credit | Benefits; - can be paid back at a later date so easier to pay back Limitations; - has to be paid back with some interest |
| Grants | Benefits; - doesn't have to be paid back - can get high amount Limitations; - may not get enough - depends on other factors |
| Owners capital | Benefits; - doesn't have to be paid back - won't be in debt Limitations; - doesn't last long |
| Retained profit | Benefits; - own profits so it doesn't have to be paid back Limitations; - only last a small period of time - only a small value so may not be useful at all times |
| Loans | Benefits; - money is instant - can be topped up if needed - easy to organise Limitations; - has to be paid back with interest - can only be limited amount |
| Share capital | Benefits; - can be large as many businesses gain a good amount of money Limitations; - has to be paid back in dividends - may not gain enough shares |
| Crowd funding | Benefits; - free - works as advertising - doesn't have to be paid back Limitations; - can't be reliable - may not gain enough funding |
| How to choose a source of finance | - Legal structure of the business - Use of the finance - Amount required - Firms profit levels - Levels of risks - Views of the owner |
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