GCSE Business - Sources of Finance

Long term finance can be used to

• Get through periods when cash flow is poor

• Provide extra cash needed when a sudden rush order requires a large sum to buy raw materials

• Finance the purchase of assets with a long life span such as property

Which is NOT a long term source of finance

• Personal savings

• Trade credit

• Bank loan

• Share capital

Which type of businesses can use share capital as a source of finance

• Sole trader

• Partnership

• Franchise

• Public limited company

Which is a source of long term finance

• Bank overdraft

• Trade credit

• Crowdfunding

Would the following business need short term or long term finance? A toy shop buying extra stock for the Christmas period

• Long term source of finance

• Short term source of finance

Would the following business need short term or long term finance? Buying land nearby in case it is needed for expansion

• Long term source of finance

• Short term source of finance

Would the following business need short term or long term finance? Redecorating your restaurant

• Long term source of finance

• Short term source of finance

Would the following business need short term or long term finance? Buying a new company BMW for the Managing Director

• Long term source of finance

• Short term source of finance

Why is retained profit the ideal source of capital to fund growth?

• You have to give away equity when using it

• You don't have to pay interest on the money used

• You are guaranteed to get the money back when it is invested

What does the word 'capital' mean when used in a finance situation

• A city

• Money

• Land

• Labour