Business Studies - AQA - GCSE - Sources of Finance

Josh Anderson
Mind Map by , created almost 4 years ago

GCSE Business studies Mind Map on Business Studies - AQA - GCSE - Sources of Finance, created by Josh Anderson on 11/27/2015.

Josh Anderson
Created by Josh Anderson almost 4 years ago
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Business Studies - AQA - GCSE - Sources of Finance
1 Personal Capital
1.1 Own money
1.1.1 Advantages Flexible Potential to raise large amounts
1.1.2 Disadvantages Shareholders expect a return
2 Retained profit
2.1 Profit from previous months from business
2.1.1 Disadvantages Could be spent elsewhere Profit is lost if business fails
2.1.2 Advantages No interest rates
3 Loan
3.1 Receiving money to pay back later for an increased price (Due to interest)
3.1.1 Disadvantages High interest rates Possible repossession
3.1.2 Advantages Repayments can be spread out to ease pressure Fairly flexible
4 Mortgage
4.1 A company takes the title of the debtor's property in exchange for finance
4.1.1 Disadvantages Company can sell the building to repay the loan High interest rates
4.1.2 Advantages Loan
5 Overdraft
5.1 When the balance in the bank goes beneath zero but the user of the account can carry on spending, as long as they pay it back (with interest) afterwards
5.1.1 Disadvantages High interest rates Risk of losing possessions if not repaid
5.1.2 Advantages No late payment penalties Less paperwork Flexible (when you need it)
6 Leasing
6.1 "Renting" the assets that are needed, small regular payments rather than one lump sum, never actually owning.
6.1.1 Disadvantages Cannot sell the asset Do not own it
6.1.2 Advantages Repairs done by leasing company Usually up to date equipment
7 Factoring
7.1 Selling accounts to a third-party funding source to raise capital
7.1.1 Disadvantages Reduces allowances for other borrowing Restrict funding
7.1.2 Advantages Prices usually low Smoothens cashflow Immediate
8 Hire purchase
8.1 Buying whilst using it, paying is smaller regular payments rather than one lump sum
9 Venture capital
9.1 Investors money (for a percentage of the business)
10 Share issues
10.1 Selling shares to new shareholders
11 Grant
11.1 Government funding
11.1.1 Advantages Don't have to pay back
11.1.2 Disadvantages Feel like a slave to the government
12 Gifts
12.1 From friends and family
13 Sale of assets
13.1 Selling belongings (business/personal)
14 Trade credit
14.1 Use it now, buy it later
14.1.1 Advantages No cash necessary immediately Induces more sales over time
14.1.2 Disadvantages High costs afterwards Chance of debt
15 Credit Card
15.1 Set balance on the card each month, anything spent must be paid back
16 Debenture
16.1 Long-term loan
17 Selling stock
17.1 Selling the produce from the business

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