Key terms
This is spending on all costs and assets other than fixed assets such as wages
What is revenue expenditure
Funds raise from sources outside the business
What is external finance?
Bank agrees to a business borrowing up to an agreed limit as and when required
What is an overdraft?
The practice of funding a project or venture by raising money from a large number of people who each contribute a relatively small amount, typically via the internet.
What is Crowdfunding?
Funds given to businesses that do not have to be repaid
What are grants?
Capital needed. by an entrepreneur to set up a business
What is start-up Capital ?
Owner's savings used as a source finance
what is personal saving?
This is a type of loan that is obtained to support a temporary personal or business capital need.
What is short term loan?
An asset is sold to a company which agrees to make fixed repayments over an agreed time period; the asset belongs to the company
What is hire purchase?
These are financial benefits given by the government to a business to reduce costs and encourage increased production
What are subsidies?
finance raised from sources outside the business
What is external finance?
When a company sells off its Assets to raise money
What is sale of assets?
This delaying payments of bills for goods and services received
What is trade credit?
This is obtaining the use of equipment or vehicles and paying a rental or leasing charge over a fixed period. This avoids the need for the business to raise long-term capital to buy the asset; ownership remains with the leasing company
What is leasing?
Individual investors who put in their own money in a variety of businesses and are seeking a better return than
they would obtain from conventional investments
Who are business Angels?
The purchase of assets that are expected to last for more than one year
What is capital expenditure?
The capital needed to pay for raw materials, day to day running costs and credit offered to customers.
What is working capital?
The is selling of claims over debtors to a debt factor in exchange for immediate liquidity; only a proportion of the value of debts will be received as cash
What is debt-factoring?
These are bonds issued by companies to raise debt finance, often with a fixed rate of interest
What are debentures or long term bonds?
The provision of very small loans by specialist finance businesses, usually not traditional commercial banks
Who are Microfinance providers?
The ability of a firm to pay its short term debts
What is liquidity?
The profit left after all deductions, including dividends have been made, this is sloughed back
what is Retained profit?
This is a type of permanent finance raised by companies through the sale of shares or giving up a stake in the company
What is Equity financing?
This where existing shareholders are given the right to buy additional shares at a discounted price
What are rights issue?
The is a financing When a company borrows money to be paid back at a future date with interest
What is debt financing