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Finance
Chapter 9
Term | Definition |
---|---|
CASH FLOW STATEMENT | Plan of future inflows and outflows of cash in a business |
DURATION OF SHORT TERM FINANCE | 0-1 years |
DURATION OF MEDIUM TERM FINANCE | 1-5 years |
DURATION OF LONG TERM FINANCE | 5+ years |
USES OF SHORT TERM FINANCE | Wages, ESB bills |
USES OF MEDIUM TERM FINANCE | Machinery, Computers |
USES OF LONG TERM FINANCE | Factory, Buildings |
SHORT TERM FINANCE OPTIONS | 1. Bank Overdraft 2. Credit Card 3. Trade Creditors 4. Factoring 5. Accrued/Due Expenses |
MEDIUM TERM FINANCE OPTIONS | 1. Hire Purchase 2. Term Loans 3. Leasing |
LONG TERM FINANCE OPTIONS | 1. Ordinary Shares 2. Retained Earnings 3. Debenture/ Long Term Loan 4. Sale and Leaseback 5. Grants 6. Venture Capital |
LEANING ON TRADE | Don't pay suppliers on time and they stop supplying you |
MORTGAGE | Household loan is borrowed to buy a house |
VENTURE CAPITAL | Banks offer both loan and capital |
SALE AND LEASEBACK | Sell your building to the bank and buy it off them at the same time |
COLLATERAL/SECURITY | Security on an asset you must offer up in return for getting a loan |
EQUITY CAPITAL | Owners put money into the business, Ordinary Share Capital, long term source of finance |
DIVIDEND | Fraction of profit given to shareholders |
FACTORING | Sell your debtors to bank in return for money |
LEASING | Renting an asset, never owning it e.g. a photocopier |
APR | Annual Percentage Rate |