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Ch 17 Managing a Business & A Household: Finance - Coggle Diagram
Ch 17 Managing a Business & A Household: Finance
Cash Flow Forecast
Surplus
Deficit
Increase selling price
Reduce selling price
Discounts
Finance
Adjust payments
Balanced
Liquidity
Purpose of a Cashflow Forecast
Identify periods of surpluses/deficits
Applying for finance
Delays
Seasonal fluctuations
BAd debts
Reasons for Preparing a Household Budget
Identify cash surplus/deficit
Apply for loans
Dealing with a Budget Surplus
Reduce mortgage
Invest to make more money
Save for the future
Dealing with a Budget Deficit
Spread payments over a longer time period
Postpone expenditure e.g. holidays
Shop around for cheaper suppliers
Sources of Finance
Short-term
Repaid within 1 year e.g. Bank Overdraft, Credit card, Accrued Expenses, Factoring, Trade Credit
Medium-term
Repaid between 1-5 years e.g. Hire Purchase (HP), Medium-term loan, Leasing (renting)
Long-term
Repaid after more than 5 years e.g. mortgage, savings, retained earnings, equity capital, grants, debenture, sale and leaseback, venture capital
LEARN THE ADVANTAGES & DISADVANTAGES & THE IMPLICATIONS OF EACH SOURCE
Factors to consider when choosing a source of finance
Purpose of finance
Security (collateral)
Tax Implications
Cost
Control
Loan Criteria used by Financial Institutions
Collateral
Character
Capacity
Creditworthiness
Banking
Current account
Deposit account
Bank Statements
SO,DD,CT,Cheque,Paypath,Debit Card,Credit Card,Phone
ATM,PIN,PAC,IBAN,BIC
Similarities Between Managing Business & Household Finance
Financial Planning
Record-keeping
Sources of finance
Bank accounts
Differences Between Managing Business and Household Finance
Financial Planning
Amount borrowed
Taxes
Sources of finance