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Ch 19
| Term | Definition |
|---|---|
| Bootstrapping | involves operating as frugally as possible and cutting all unnecessary costs. |
| Factor | an agent who handles an entrepreneurs accounts receivable for a fee. |
| Equity capital | is cash raised for a business in exchange for an ownership stake in the business. |
| Equity | ownership within a business. |
| Risk capital | money invested in companies where there is financial risk. |
| Angel | a private investor who funds start-up companies. |
| Venture capital | source of equity financing for a small business with exceptional growth potential and experienced senior management. |
| Venture capitalists | individual investors or investment firms that invest venture capital professionally. |
| Debt capital | money raised by taking out loans |
| Operating capital | the money a business uses to support its operations in the short term. |
| Line of credit | an arrangement whereby a lender agrees to lend up to a specific amount of money at a certain interest rate for a specific period of time |
| Trade credit | credit that one business grants to another business for the purchase of goods or services |
| Pro forma | refers to a proposed or estimated financial statement based on predictions of how the actual operations for the business will turn out |
| Character | a borrower's reputation for fair and ethical business practices |
| Capacity | refers to the ability of a business to pay a loan in view of its income and obligations |
| Capital | the net worth of a business, the amount by which its assets exceed it liabilities |
| Collateral | is security in the form of assets that a company pledges to a lender |
| Conditions | the circumstances at the time of a loan request |
| Due diligence | the investigation and analysis a prudent investor does before making business decisions |
| Private placement | private offering or sale of securities directly to a limited number of institutional investors who meet certain suitability standards |
| IPO | the sale of cock in a company on a public stock exchange |
| Stock | type of security that signifies ownership of in a corporation |
| Working capital | the amount of cash need to carry out the daily business operations |
| Contingency fund | the extra amount of money that is saved and used only when absolutely necessary |