Sources of finance 1
A financial service whereby a factor (such as a bank) collects debts on behalf of other businesses , in return for a fee.
What is debt factoring?
Money raised from selling shares in limited liability company, from its initial public offering (IPO) and any subsequent shares issued.
What is share capital?
Costs specifically attributed to the production or sale of a particular good or service.
What are direct costs?
The positive difference between a firms revenues and its costs. On a break even chart, the level of output beyond the break even quantity.
What is profit?
The difference between the sales revenue of a business and its direct costs incurred in making or purchasing the products that have been sold to customers.
What is gross profit?
A form of hiring whereby a contract is agreed upon between a company and the customer. The customer pays a rental income to hire assets from the company, who is the legal owner of the assets.
What is leasing?
Finance from the government that lowers firms costs of production as output provides extended benefits to society. For example, farmers given financial assistance to stabilize food prices.
What are subsidies?
A share of the net profit distributed to shareholders at the end of the tax year.
What are dividends?
The difference between a firms level of demand and its break even quantity. The extent to which demand for a product exceeds its BEQ.
What is margin of safety?
The surplus that a business makes after all expenses have been paid for.
What is net profit or retained profit?
Sources of finance of more than five years, used for the purchase fixed assets or to finance the expansion of a business.
What is long term finance?
The value of surplus that the business keeps to use within the business after paying corporate taxes to the government and dividends to its shareholders.
What is retained profit?
Costs that do not directly link to the production or sale of a specific product.
What are indirect costs or overheads?
The difference between the selling price of a product and its variable costs of production. The surplus goes towards selling fixed costs.
What is contribution?
On a balance sheet, long term items owned by a business used repeatedly to generate revenue. For example land, buildings and machinery.
What are fixed assets?
High risk capital invested by a firm, usually at the start of the business idea. The finance is usually in the form of a loan and/or shares in the business venture.
What is venture capital?
Allows a business to spend in excess of the amount in its bank account, up to a predetermined limit. The most flexible short term form of borrowing.
What is an overdraft?
Refers to all the money coming into the business from various business activities. For example sponsorship deals, merchandise, membership fees and royalties.
What is a revenue stream?
The point on the break chart where the total costs line intersects the total revenue line.
What is the break even point?
On a balance sheet, short term items that belong to a firm that are expected to remain up to 12 months. For example cash, debtors and stock (inventory)
What are current assets?
Allows a business to 'buy now and pay later'. The company pays the supplier for the product after it is sold or a later date agreed upon.
What is trade credit?
Wealthy entrepreneurs who risk their own money by investing in small to medium sized businesses that have high growth potential.
What are business angels?
Costs of production that change in proportion to the level of output
What are variable costs?
The amount of surplus a firm intends to achieve based on price and cost data. Calculated from taking estimated total costs from expected sales revenue.
What is target profit?
On a profit and loss account, the direct costs of producing or purchasing stock (inventory) that has been sold.
What is cost of goods sold (COGS) or cost of sales (COS).