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Financial Information and Decisions (Key Terms (Revenue (The income that…
Financial Information and Decisions
Business Finance: Needs and Sources
Sources of Finances
External Sources of Finance
Business with limited internal funds seek external sources of finance.
Debt factoring
Trade credit
Overdrafts
Leasing
Share issue
Hire purchase
Sale and leaseback
Bank loans
Grants
Debentures
Venture capital
Are money obtained from outside the business
Short-term finance
Short term sources of finance are used to find revenue expenditure and are usually repaid within one year.
Long-term finance
Long term Finance is used to fund capital expenditure.
Internal Sources of Finance
Working Capital
Sakes of assets
Retained Profits
Owner'f funds
Money obtained from within the business
Debt VS Equity
Debt
Advantages
Disadvantages
Equity
Advantages
Disadvantages
Key Terms
Revenue
The income that the business has from normal business activities (Sales)
Captial
A sum of money used to invest in fixed assets or to start a business
Asset
Something which is owned by the business
Liability
Something the business owes. It loses the business money
Debtor
Someone that the business owes money to. (Suppliers, etc)
Creditor
Someone that owes money to the business (Customers might owe money to pay off a good or service)
Working Capital
The money which is used on a daily bases. Current assets minus current liabilities
Debentures
A type of loan that is to be paid back over a long period of time
Cash
Money which is in the back and can be accessed easily
Liquidity
Business turning assets into cash quickly
Profit
Sales revenue minus expenses
Equity
The sum or value of money raised through selling shares in a company