Sources of finance
What are the 2 type of financial sources?
What is internal and external
ROI stands for this
What is return on investment?
Creating a plan for saving and spending money
What is budgeting?
A type of funding whereby the provider receives part ownership of the business in exchange for the finance.
What is equity finance?
Money that is borrowed from a bank or other financial institution, usually to fund investments.
What is debt finance?
Sum of money borrowed from a bank, typically paid bank with interest.
What is a bank loan
This type of financial source involves an external stakeholder taking a risk and investing in the business.
Why is external sources of finance?
The potential cost of missing an opportunity by choosing one option and foregoing another.
What is opportunity cost?
A wealthy business person who invests their money into new businesses. Also knowns as a "shark".
What is a business angel?
A medium- or long-term source of finance, often used to buy fixed assets.
What is a loan?
Personal funds, retained profits, and sale of assets are all examples of this
What is internal sources of finance?
The cost of borrowing money; expressed as a percentage of the amount borrowed.
What is interest rate?
A type of internal source suitable for small businesses without large funding needs.
What is personal funds?
Financing that pools resources from a group of investors to fund new businesses.
What is venture capital?
A high-cost, short-term loan attached to a bank account; allows the account holder to withdraw an amount of money that is greater than the amount they currently hold.
What is overdraft?
What is personal funds?
The term for the amount of money coming into and going out of a business.
What is cash flow?
This concept contrasts using debt (borrowed funds) with equity (owner's funds).
What is cost-benefit analysis?
Finance for a business that is raised through the issue of shares to new investors on a stock market.
What is share capital?
A type of external finance whereby a business receives products from a supplier immediately, but pays for them at a later date.
What is trade credit?
Money a company has left at the end of the trading year after paying all costs, expenses, dividends and taxes.
What is retained profit?
A special type of long-term loan that is used to purchase land or buildings.
What is a mortgage?
This evaluation ensures a business adheres to laws and regulations, affecting financial decisions.
What is risk-assessment?
Long-term financing, where investors are willing to wait longer to see returns and expect a fair, not excessive return on their money.
What is patient capital?
A form of finance where many people, perhaps thousands, invest small amounts of money to fund a business or project.
What is crowdfunding?