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3.1 sources of finance 3.2 costs and revenues - Coggle Diagram
3.1 sources of finance 3.2 costs and revenues
internal sources of finance
personal funds
(for sole traders): your own money
retained profit
: reinvest that money in the company
sales of assets
: selling vehicles, machinery etc
external sources of finance
share capital
obtain money from the sale of shares
loan capital
borrowing funds from a financier, (bank)
ovedrafts
enables a business to withdraw (retirar) more money than exists in its bank account
trade credit
agreement to pay the bill not immediately
grants
financial assistance from the government, given to qualify businesses to aid their operations
subsidies
are provided in order to encourage output such as public transport
debt factoring
a business might struggle to get payment of its debtors, so a debt factor takes that debts from the business
leasing
common way to finance fixed assets without the necesary capital expediture
venture capital
This is financial capital provided by investors to high-risk, high-potential start-up firms or small businesses (1 company)
business angels
individuals who provide financial capital to small start-ups or entrepreneurs in return for ownership equity in their businesses (1 person)
capital/ revenue expenditure
capital expenditure
money spent to acquire fixed assets in a business, long expenditure (machinery,land)
revenue expenditure
: money used in the day to day running of a business (rental,raw material)
short/medium/long term finance
short term
less than 1 year
medium term
between 1 and 5 years
long term
more than 5 years
types of costs
fixed costs
are costs that don't change with the level of output (rent, salaries)
a cost is a total expenditure, goes out of the company
variable costs
are costs that change according to the level of output (suppliers, rawmaterials)
semi-variable costs
have characteristics of both fixed and variable costs
direct costs
are costs that can be clearly & specifically indentified with the output of a certain product (raw materials)
indirect costs
are costs that cannot be clearly identified with the production of a good or service (renting)
total revenue and revenue streams
total revenue
: it refers to the income from the sale of goods
TR=P · Q
revenue streams
businesses have more than 1 source of revenue (apple: computer phones ipad)