...Take the long way home
How many years is in a long-term finance?
5+ years
Why does a household or business need cash flow management (budgets)?
Avoid cash flow problems, Advance notice of a deficit, Advance notice of a surplus, Identifies times of high expenditure (Christmas, birthdays, etc), In order to set targets, Used as a tool when applying for a loan.
How many years is short-term finance?
0-1 Year
How many years is in a medium-term finance?
1-5 years
Name two examples of long-term loan.
Mortgage, Savings, Retained Earnings, Equity Capital, Grants, Debentures, Venture Capital
Money coming in is known as "R________".
Money going out is known as "P________".
Receipts
Payments
Name two examples of short-term loans.
Bank Overdraft, Credit Card, Accrued Expenses/Accruals, Factoring, Trade Credit
Name two examples of medium-term loans.
Medium Term Loan, Hire Purchase, Leasing
SUPER BONUS QUESTION!!!
What is the greatest softball club of all time?
Navan Dragons
Give two examples of Household Income and two examples of Business Income.
Household: Wages & Salaries, Social Welfare Benefits, Child Benefits, Interest on Investments, Loans (Borrowings)
Business: Cash sales, Payments from debtors, Interest on investments, Sale of fixed assets, Owner's capital, Grants, Loans/Borrowings
Give one advantage and one disadvantage to using a Credit Card.
Advantages: No interest is charged if the bill is paid on time / If stolen, it can be canceled (safer than carrying cash).
Disadvantages: High interest rates if not paid back on time / Household must pay government tax on every credit card it owns.
Give one advantage and one disadvantage of a Medium Term Loan.
Advantages: The rate of interest charged is usually cheaper than HP / The interest paid is tax deductible, which lowers the tax bill / The entrepreneur’s control over the business is not affected.
Disadvantages: Security is normally required to get a medium-term loan. The business has to give the bank the deeds to its valuable assets to secure the finance. Therefore, the bank will take some of the business’ assets if the business cannot pay the loan / If the ECB increases interest rates and the business’ loan is variable, monthly repayments will increase.
Explain what is meant by 'Venture Capital'. Name one advantage and one disadvantage.
This is provided as start-up (seed) capital for new business enterprises and as development capital for existing businesses in which there is a higher than average degree of risk. The risk will be high but the possible returns on profit will also be high.
Advantages: Expertise and knowledge brought into business / No interest payments / Large amounts of finance available.
Disadvantages: Control is lost / Profits must be shared / All funds provided by the venture capital firm not always put in immediately.
What are the three different types of expenditure? (HINT: Wages, Winning the lottery, etc)
Fixed, irregular & Discretionary
Explain what an accrual/accrued expense is and give an example.
Accruals are services which we have the use of now but we pay for later, eg. telephone, electricity, or gas bills. It is essentially the delaying of the payment of bills to free up money to spend on other items.
What is meant by the term 'Leasing' and give one example of Leasing.
Leasing is like renting. The asset acquired is at all times owned by the lessor who rents it to the lessee over an agreed period of time in return for regular payments. Ownership thus never passes to the person renting it (the lessee). At the end of the agreement, the asset is returned to the seller. EXAMPLE: Car, house/apartment, etc.