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business finance: needs and sources - Coggle Diagram
business finance: needs and sources
start up capital
: the capital needed by an entrepenaur when first starting a business
working capital: the capital needed to finance the day-to-day running exspenses and pay short term debts to the business
capital expenditure:spending by a business on non current assets.
non current fixed assets: resources owned by a business which will be used for a period longer than one year
long term finance:debt used to finance the purchare of non current assets or financial expansion plans. long term debt is borrowing a business does not expect to repay in less than 5 years
short term finance:loans or debt that a business expects to pay back in one year.
retained profit: profit remaining all expenses taxes or dividends have been paid profit which is ploughed back into the business.
overdraft: an agreement with the bank which allows a business to spend more money than they have in its account up to an agreed limit. the loan has to be repaid in 12 months.
debt factoring
trade receivable: amount owed to a business by its customers who bought goods on credits.
debt factoring: selling trade recievables tp improve business liquidity
bank loan: provision of finance by a bank which the business will repay with interest over an agreed period of time.
leasing: obtaining the use of a non current asset by paying a fixed amount per time period for a fixed period of time. ownership remains with the leasing company
hire purchases:the purchase of an asset by paying a fixed repayment amount per time period over an agreed period of time. the asset as owned by the purchasing company on completion of the final repayment.
mortgage: long term loans used for the purchase of land or buildings
debenture: bonds issued by companies to raise long term finance usally at a fixed rate of interest
share issue: source of permanent capital available to limited liability companies
equity finance:permanent finance provided by the owners of a limited company
micro finance:small accounts of capital loaned to entrepenaurs in countries where business finance is often difficult to obtain. these loans are usally repaid after a relatively short period of time.