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AS Business Finance :explode: (Factors to consider for finance decisions :…
AS Business Finance :explode:
Why?
Expansion costs
Finance for special situations
Day to day finance - working capital
Pays for research and development
Set up business with start-up capital
Expenditure
Capital
Purchase of assets expected to last more than a year eg machinery
Revenue
spending on all costs and assets other than fixed costs eg wages
Sources of finance
External
Medium
Hire purchase + leasing
Medium term bank loan
Long term
Long term bank loan
Long term bonds or debentures
Sale of shares
Grants + venture capital
Short
Trade credit
Debt factoring
Bank overdraft
Internal
Sale of assets
Reductions in working capital
Retained profits
Finance for unincorporated businesses
Crowd funding
Microfinance
Factors to consider for finance decisions :
Amount required
Legal structure
Cost
Finance usage
Size of existing borrowing
Flexibility
Main financial stakeholders :
Shareholders
Banks
Creditors