868844
Description
Flashcards by LouisTaylor_, updated more than 1 year ago
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Created by LouisTaylor_
over 10 years ago
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| Question | Answer |
| Owners Capital | This type of capital is raised when an owner is starting up their business. When share holders are introduced to the company they become part owner of the company, the amount of shares a person has should me monitored so that there is not a take over of the company by this person. |
| Venture Capital | This type of capital comes from companies or people which invest money in return for a share in the company and part ownership of the company. |
| Borrowing | This type of capital comes from taking out a loan from a financial organisation, such as a bank. The capital borrowed has interest added on top of it to be paid off. |
| Borrowing - Bank Loans | These are taken out for a fixed period of time with repayments being made in instalments or paid off completely at the end of the term of the loan |
| Borrowing - Debentures | These are certificates issued by a company that acknowledging their debt. The debt is repaid at a fixed rate of interest with the certificate setting out the terms of the repayment at the end of the period of debt. |
| Borrowing - Bank Overdrafts | An agreement is made between the company and the bank to include an agreed limit on an account which cannot be withdrawn past. Interest is calculated on the overdraft daily. The bank can also take away the use of the overdraft whenever they want. |
| Borrowing - Hire Purchase | This allows the company to use an asset before they have to pay for it. The business usually pays a deposit for the item and set out a repayment agreement. |
| Borrowing - Leasing | This is when a company allows a company to use an item as a rental rather than the company buying it |
| Borrowing - Mortgages | This is a type of loan which is taken out against land and buildings and can be used to finance to purchase a property or provide security for a loan applied to some other purpose. These are long term finance options that are typically repaid within 10 to 30 years. Repayments include a interest rate. |
| Borrowing - Suppliers | This allows a company to purchase materials etc an pay the company within a set amount of time such as 30 days |
| Borrowing - Factoring | When a company owes money to another company the debt can be bought by a third party so that the company can get the money owed. The third party will then collect the money from the company that owes the money so that they are not out of pocket. |
| Borrowing - Government Loans | The government may give a grant to a company that will benefit a community in any way. For example the government may give a grant to a start up company if they set up the business in an area of high unemployment. |
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