Sources of Finance (Junior Cert Business Studies): Flashcards

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Sources of Finance
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Short-term finance timeframe

Within 1 year (12 months)

Medium-term finance timeframe

1 to 5 years

Long-term finance timeframe

Over 5 years or no repayment needed

4 factors influencing finance choice (acronym)

UCCR: Use, Cost, Control, Repayments

Bank overdraft

Withdraw more money than in account, up to agreed limit

Trade creditors

Purchase supplies on credit, pay at future date

Accruals

Expenses incurred but not yet paid

Leasing

Rent asset with full use but never own it

Hire purchase ownership

Transfers to business after final payment

Retained earnings

Profits reinvested back into company, not distributed

Grants

Money from govt/EU that doesn't require repayment

Ordinary share capital

Raising finance by selling shares (partial ownership)

Sale and leaseback

Sell asset to raise money, then lease it back for use

Min share % to maintain control

51%

Why retained earnings called 'free' finance

No repayment obligations or interest charges

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