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Finance Introduction Sources of Finance

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					Finance 2.3
GCSE Business Studies
           Sources of Finance
• An important part of expanding a small
  business into a larger one is finding the
  necessary finance to pay for it.



• As a business grows, more sources of finance
  become available than start-up businesses.
          Finance is needed for..
•   New property, such as offices, shops or factories
•   Machinery equipment and vehicles
•   Recruiting and training new employees
•   Advertising campaigns/Marketing Campaign
•   Raw materials
•   Developing new goods and services
•   Introducing new methods of production
•   To pay for the purchase of a whole new business -
    takeover
• Capital Expenditure

• Revenue Expenditure
              Borrowing Money
                    Time             Possible
                   frame              usage
 Short term     Under 1 year     Working capital


Medium term      1-5 years     Capital expenditure
                                     (vehicles,
                                refurbishments etc)
 Long term      Over 5 years       Major capital
                                    expenditure
                               (buildings, lands etc)
                   Finance
• Finance is an essential part of the success of
  any business
• Expanding a business needs capital just as
  much as a start-up business
             Sources of Finance
•   Retained profit
•   Selling unwanted assets
•   New share issue
•   Loan
•   Mortgage
•   Venture Capital

For each one, explain what it means and write one
         advantage and one disadvantage.
What does the source of finance depend on?

				
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