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Unit 3 – Sources of Finance

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					    Unit 3 – Sources of Finance
•   All types of business need money to?
•   Write 4 things down.
•   Buy supplies – from suppliers
•   Pay staff
•   Buy equipment
•   Pay bills
•   Pay rent / mortgage for building
        Sources of finance
• Internal – money from inside the
  business
• External – money from outside the
  business
           Internal Finance
• 1) Reinvesting profits – called
 retained profits. Money left over after all
 costs have been paid.
• 2) Working capital – money used by
 business on a day to day basis to pay for
 supplies / bills. Cash in till, bank etc
• 3) Sale of assets – land, buildings etc
          External Sources
• 1) Bank loans – money obtained from banks
  which paid back over a period of time in monthly
  instalments. Interest charged. End up paying
  more back. May need to offer security – e.g.
  building
• 2) Share capital – part of business sold for £ -
  shareholders become part owners. Receive
  payment based on profit called – DIVIDENDS
• Available to – private and public limited
  companies. Only Public can sell shares to
  anyone. Expensive to set up public sale.
    Unit 3 – Sources of Finance
• 3) Trade Credit – getting supplies and being able to pay
  for them later e.g. 30 days, pay by end of month
• 4) Overdraft – agreed facility with a bank to spend more
  than is in bank account up to an agreed limit. Interest
  can be charged
• 5) Government Grants – financial help from the
  government

• To do -
• A) Make notes from page 116 – 117 on government
  grants
• B) Copy the table page 116
• C) Complete the question sheet

				
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posted:7/30/2013
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