obtaining finance
Learning Objectives:
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Specification:
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sources_of_finance_key_terms.docx | |
File Size: | 12 kb |
File Type: | docx |
Key Term: LONG-TERM FINANCE - Sources of money for businesses that are borrowed or invested typically for more than a year.
Key Term: SHARE CAPITAL - The monetary value of a company which belongs to its shareholders.
Key Term: SHARE - a part ownership in a business; for example a shareholder owning 25% of the shares of a business owns a quarter of the business.
Key Term: SHAREHOLDERS - the owners of a company.
Key Term: PERSONAL SAVINGS - money that has been set aside and not spent by individuals and households
Key Term: VENTURE CAPITALIST - an individual or company which buys shares in what they hope will be a fast growing company with a long-term view of selling the shares at a profit.
Key Term: LOAN - borrowing a sum of money which has to be repaid with interest over a period of time, such as 1-5 years. This will have interest attached to it.
Key Term: SECURITY (OR COLLATERAL) - assets owned by a business which are used to guarantee repayments of a loan; if the business fails to pay off the loan, the lender can sell what has been offered as security.
Key Term: MORTGAGE - a loan where property is used as security.
Key Term: RETAINED PROFIT - profit which is kept back in the business and used to pay for investment in the business.
Key Term: DIVIDEND - a share of the profits of a company received by shareholders who own shares.
Key Term: LEASING - renting equipment or premises.
The type of things a business would look to lease are buildings, equipment (machinery) and vehicles. They don't have to pay to own the asset which is expensive, but may end up paying more for it over a longer period of time, and with interest.
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Key Term: GRANT - some start-up businesses are eligible for grants from the government or European Union, or from charities like the Prince's Trust. They do not have to be paid back, but have a lot of conditions attached to them.
Key Term: SHORT-TERM FINANCE - Sources of money for businesses that may have to be repaid either immediately or fairly quickly, such as an overdraft, usually within a year.
Key Term: OVERDRAFT FACILITY - borrowing money from a bank by drawing more money than is actually in your account. Interest is charged on the amount overdrawn.
Key Term: TRADE CREDIT - negotiating with suppliers a period of time before goods and services that have been purchased have to be paid for. This is usually 30 days credit.
Key Term: FACTORING - a factor (financial company) buys a debt from a business and pays the business typically 90% of the value of this debt. Therefore the business gets paid immediately. The factor charges a fee for this.
sources_of_finance_worksheet.docx | |
File Size: | 16 kb |
File Type: | docx |