Sources of Finance BM3

The main source of finance for PLCs is:

• Banks

• Selling shares

• Grants

• Personal savings

External sources of finance are raised from inside the business.

• True

• False

A form of internal finance is selling assets.

• True

• False

Using retained profits will incur interest charges.

• True

• False

Buy now, pay later, is this form of external finance.

• Bank loan

• Overdraft

• Trade credit

• Debt factoring

Selling trade receivables to another business in order to receive cash is called:

• Trade credit

• Debt factoring

• Liquidation

• Overdraft

Making monthly payments in to pay for a fixed asset until it is owned is called:

• Leasing

• Renting

• Hire purchase

• Debt

Leasing is similar to hire purchase, except that:

• You don't own the asset at the end

• You own the asset at the end

• It is cheaper

• It has no up-front charge

Money from government or other agencies to help finance businesses, not needed to be paid back.

• Venture capitalists

• Bank overdraft

• Trade credit

• Grants

This type of financial market can be government and corporate.

• Derivatives markets

• Bond markets

• Stock markets

• Currency markets