Vocabulary
Types of finance
Working capital
Financial Management Strategies
Accounting equations
100
the capital needed to pay tor raw materials, day-to-day running costs and credit offered to customers
working capital
100
</= 12 months is __________ finance
>12 months is ___________ finance
short-term and long-term
100
someone a business owes money to
creditor
100
distribution of payments
factoring
discounts for early payment
cash flow management
100
What is the accounting equation
A=L+OE
200
existing shareholders are given the right to buy additional shares at a discounted price
rights issue
200
used by businesses to pay for short term unexpected expenses
overdraft
200
Without sufficient working capital, a business will be ________ and unable to pay its immediate or short-term ________.
illiquid / debts
200
leasing
sale and lease back
working capital management
200
Current assets/current liabilities
working capital/liquidity
300
the ability of a business to pay its short-term debts
liquidity
300
interest payments are tax deductible
loans
300
When businesses expand, they generally need higher inventory levels and the total value of products sold on credit will increase. Therefore the increase in working capital will likely be __________
permanent
300
variable and fixed costs
expense minimisation
cost centres
revenue controls
profitability management
300
used to calculate the gross profit
sales and cogs
400
long-term bonds issued by companies to raise debt finance, often with a fixed rate of interest
debentures
400
when the businesses has no assets to use as security
unsecured loan
400
- delaying payments to suppliers to increase the credit period
- only buying goods from suppliers who will offer credit
ways to manage working capital
400
payment in advance
letter of credit
clean payment
bill of exchange
methods of international payment
400
determines if a business is able to survive in the long term
solvency
500
selling of claims over trade receivables (debtors) to a specialist organisation (debt factor) in exchange for immediate liquidity
factoring
500
when a business uses its own funds to make a large purchase
retained profits
500
A major factor influencing the finance choice is the length of time each of these types of expenditure is required for
capital expenditure and revenue expenditure
500
what business is this?
IKEA
500
needs to have final answer multiplied by 365
accounts receivable turnover ratio