Sources of Finance (AQA A-Level Business): Flashcards
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Two main categories of finance sources
Two main categories of finance sources
Internal sources and external sources
Retained profit definition
Retained profit definition
Profit not distributed as dividends, kept in business
Three key advantages of retained profit
Three key advantages of retained profit
No interest, no repayment, doesn't dilute ownership
Key feature: equity repayment
Key feature: equity repayment
Never has to be repaid to shareholders
Main disadvantage of equity
Main disadvantage of equity
Dilutes existing shareholders' ownership stake
Key obligation of loans
Key obligation of loans
Must be repaid with interest payments
Overdraft flexibility benefit
Overdraft flexibility benefit
Only pay interest on amount actually overdrawn
Debt factoring: immediate payment percentage
Debt factoring: immediate payment percentage
Approximately 80% of invoice value
Trade credit main benefit
Trade credit main benefit
Interest-free loan from supplier
Mortgage purpose
Mortgage purpose
Long-term loan to purchase land or buildings