FINANCE FOR BUSINESS

1. How companies finance their objectives?

• a small company:

• a large established company:

2. Internal sources of finance:

• retained profits

• funds obtained by reducing stocks

• funds obtained by selling under-used assets

• money made available by reducing the credit available to customers

• profits retained for depreciation

• money gained by making sure that all funds are put to effective use (earning interest)

3. External sources of finance:

• banks: overdraft, secured loans, mortgages

• Public and finance institutions: debentures, shares

• Hire: hire purchase, leasing

• Extending credit from suppliers

• Factoring

4. Type of shares:

• ordinary shares

• preference shares

• cumulative preference shares

• participating preference shares

5. Issue of shares:

• public issue

• offer for sale

• placing

6. The qualities of money: acceptable, durable, portable, scarce

7. Types of accounts: cheque accounts, deposit accounts, foreign currency accounts, Money market accounts

• standing orders

• direct debit

8. Insurance & assurance:

• health insurance, personal accident insurance, binding and contents insurance, fidelity insurance, public liability insurance

• damages

• broker

• underwriter

• assessor

• actuary