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Business - finance - Coggle Diagram
Business - finance
5.2 - sources of finance
owners capital
Quick and convenient, doesn’t require borrowing money so no interest payments to make
The owner might not have enough savings or may need the cash for personal use, once the money is gone it’s gone
retained profit
- quick and convenient + no interest payments to make
Once the money is gone, it is not available for any future unseen problems the business may face
sale of assets
Quick, raise money from unused equipment
Might not get full market value, might need assets in the future
overdraft
Quick access, allows emergency purchases
High interest rates, only a short term solution
trade credit
Access to supplies without immediate payment, no interest
Short term, must be paid off quickly and is usually small amounts
taking on a new partner
Easy way to gain huge amounts of money, may offer help and advice
Owner must give away part of their business, new partner may have a different vision for the business
loan
Easy and quick to access, can get a significant amount of money at one time
Have to pay interest, difficult for a new business to access
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5.4 - breakeven
the amount a business must sell o cover its costs, but does not make a profit or loss.
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