Sources of Finance
- Owner's equity
- Retained profits
Name the two types of banks involved with business
- Commercial banks
- Investment banks
What is the flat rate for company taxation in Australia
30%
What does global economic outlook mean
What are the four P's of the marketing mix
Price, product, placement and promotion
List all of the long-term debt finance options
- Mortgage
- Debentures
- Unsecured notes
- Leasing
Provide three points of difference between a commercial bank and an investment bank
- CB deal with individuals and small to medium enterprises
- IB deal with large corporations and governments
- CB primarily make money of interest rates and fees
IB - make money through fees, interest rates but also shares in businesses
- IB offer financial advice
- IB assist in company take overs and mergers
- IB assist businesses in obtaining global financing
- CB offer cards
What does the acronym ASIC stand for?
The Australian Securities and Investments Commission (ASIC)
Why would Australian businesses look to borrow from international sources of finance
Lower interest rates
What are 2 advantages of outsourcing
- Reducing the amount of jobs needed to be performed within the business
- Efficiency and cost savings (cheap labour)
- Access to skills/resources lacking within the business
- Capacity to focus on more pressing issues within the business
What is the difference between ordinary equity and private equity?
Ordinary - selling shares (ownership in your business) in your company which makes it a private entity
Private- selling ownership of your business to private investors
What is one advantage and one disadvantage of sourcing finance through a finance company?
- Adv: easier to be approved and quicker to recieve the funds
- Dis: higher interest rates and lower loan amounts
What is the name of legislation that protects consumers and businesses in the financial sector?
Corporations Act 2001
What would a positive global outlook mean for businesses
- Increasing production to meet global demand
- Leads to more jobs, spending
- More loans to purchase equipment, products etc. (stimulates banks and in turn the economy)
- Business growth
What are the 6 main types of markets
- Industrial
- Resource
- Intermediate
- Mass
- Consumer
- Niche
Explain what factoring is (also include whether it is short term/long term and debt/equity)
Factoring is a short term source of debt finance that involves a business selling their accounts receivable to an external company at a discounted rate.
Explain how superannuation funds are a source of income for businesses
They invest members capital into businesses shares
When are a company's dividends paid out to shareholders
After the business pays tax
Provide the exact definition for 'interest rates'
Interest rates are the cost of borrowing money
What are 3 financial costs involved with change that usually leads to resistance of change
- Cost of purchasing new products
- Cost of redundancies
- Cost of retraining employees
- Costs involved with reorganising plant layout
What are the two types of leasing options
- Operating (short term, shorter than the life span of the asset and can cancel without a penalty )
- Financial (long term, for the life of the asset and involves penalties involved for cancellation)
What is Australia's stock exchange called - both full name and acronym
Australian Securities Exchange (ASX)
What is meant by fiscal policy
How a government changes their tax rate (and government spending) to influence a nation's economy
What is the main danger with borrowing money from international sources
Global markets are a lot more unpredictable than domestic markets. If interest rates change, businesses could end up having their repayments increase significantly.
Figure out the critical path for the following critical path analysis
FD --> EA --> PS --> RS --> A --> I&T