Financing growth (Edexcel GCSE Business): Flashcards
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Practise the cards
12 cards from this deck
Two main approaches to financing business growth
Two main approaches to financing business growth
Internal (from within business) & External (outside sources)
Internal sources of finance
Internal sources of finance
Money already existing within the business
External sources of finance
External sources of finance
Money obtained from outside the business
Sale of assets benefit
Sale of assets benefit
Generates immediate cash for growth
Sale of assets trade-off
Sale of assets trade-off
Business loses the benefits of owning that asset
Retained profit definition
Retained profit definition
Earnings kept in company, not distributed to owners/shareholders
Most secure method of financing growth
Most secure method of financing growth
Retained profit
Retained profit main advantage
Retained profit main advantage
No external debt or financial risk
Loan capital is secured against
Loan capital is secured against
Company's assets
Key characteristic of loan capital
Key characteristic of loan capital
Regular repayments with added interest charges
Share capital involves
Share capital involves
Selling ownership shares to investors
Share capital drawback
Share capital drawback
Giving up partial ownership and control