finance

used to predict how much money a business will have in the future

• 1. selling goods
• 2. cash received from credit
• 3. income on investments (interest_
• 4. rent from tennants

• 1. buy stock
• 2. pay bills
• 3. buy fixed assets
• 4. pay dividends
• 5. pay expenses (wages)
• 6. taxes

• 1. increase cash receipts
• 2. reduce cash payments

• 1. better credit control methods
• 2. sell investments
• 3. have a sale

• 1. make cutbacks
• 2. offer shares instead of dividends
• 3. lease or hire purchase instead of buying

• 1. shows all inflows and outflows
• 2. to show to bank manager when applying for a loan
• 3. lets business know when there's going to be a deficit
• 4. lets business know when there's going to be a surplus
• 5. control cash flow (compare receipts with forecast)

• `1. overtime, extra job
• 2. rent spare room to a student

• 1. hire purchase
• 2. cutbacks

• 1. highlights areas of overspending
• 2. when applying for loan
• 3. ensures they can pay bills on time
• 4. lets them know when there going to be surplus

computer software that is used for basic accounting

• 1. saves time and money
• 2. allows for what if analysis

• >bank overdraft
• >accrued expenses
• >trade credit
• >factoring

• >hire purchase
• >leasing
• >term loan

• >debentures
• >retained earnings
• >grants
• >equity capital

permission is granted by the bank to allow the account holder to over draw from their account by a specific amount.. payed back later with interest

• >interest only paid on amount o/d
• >no security needed

• >rate of interest is expensive
• >must be o/d free for at least 30 days in the year
• >bank can ask for it to be paid back immediately
• >extra charges if you go over o/d limit

get services now and pay for them later e.g. phone, electricity

• >no interest
• >no security needed

• >take too long to pay bill.. then cut off.. may have to pay reconnection fee
• >only suitable financing for certain purchases such as utility charges

business raises mone by selling its debtors to a bank for cash

• >get cash immediately
• >no security needed
• >control of business not affected

• >expensive
• >can only be used if you sell a lot of goods on credit

when a business buys stock now and pays for it later

• >no interest
• >no security
• >control not affected

• >pays late.. loses out on cash discounts
• >could lose credit rating

buying an asset and getting use of it straight away but paying for it in installments.. only owns product when last installment paid

• >gets asset immediately
• >does not have to provide any collateral
• >tax deductable

• >expensive.. high interest
• >if you cant pay instalements.. repossessed
• >pay interest om the inital sum borrowed

renting an asset from a finance company for a fixed period and pay regular installements

• >get asset immediately
• >does not have to provide collateral
• >can always have up-to-date equiptment
• >tax deductable

• >cannot make payment.. repossessed
• >if rents for a long while.. may have been cheaper to buy it

whe the business borrows money from a bank and pays it back in regular installments over five years with interest

• >rate of interest cheaper than hire purchase
• >tax-deducatable
• >control not affected

• >security needed
• >interest rates can be increased by european central bank

reserves.. profits that the business has saved up over the years

• >no interest
• >no security
• >no worry of bankruptcy

• >not available to new businesses
• >if save alot of profits.. low dividends.. bad relationship with shareholders

sum of money the government gives a business to help it pay the things it needs such as building, machinery.. does not have to be repaid

• >no interest
• >no security
• >does not have to be repaid

• >strict conditions
• >only a percentage of money the business needs

loan secured on the company's assets

• >tax deducable
• >control of business not affected

• >security needed
• >increases chance of going bankrupt
• >harder to get more loans

investors who buy shares

• >no interest
• >no security needed
• >does not have to be repaid until closes down
• >no worry over bankruptcy

• >reduces control over business
• >not tax deductible
• >selling shares is expensive

• >character
• >capacity
• >collateral
• >credit rating

• >cost
• >purpose
• >security
• >tax implications
• >control

the life of the loan should never be longer than the life of the asset bought

bank a/c that businesses and households use for handling money that comes in and goes out all the time

• >cheque
• >standing order
• >direct debit
• >paypath
• >atm cards
• >laser cards
• >bank statements

deduct a fixed amount of money from a/c at regular intervals

similar to s.o but amount changes

way ees are paid

• >both engage in cash flow forecasting
• >both engage in the management activity of controlling
• >both use external and internal communications
• >both raise finace

• >business works out own taxes.. household doesnt
• >businesses engage in manpower planning.. households dont
• >businesses larger than households.. businesses run by managers.. households run by themselves
• >business produces and markets products.. household doesnt