finance

• What is the purpose of short-term finance for a business?

  To maintain a positive cash flow
• How can short-term finance help during seasonal cash flow issues?

  It helps businesses during poor cash flow periods
• When might a business use short-term finance to bridge a gap?

  When a large payment is delayed
• What is an overdraft?

  A common form of short-term finance
• Why should overdrafts be used carefully?

  They can become expensive due to high interest
• What is a common feature of bank overdrafts regarding interest rates?

  They have variable interest rates
• How does the flexibility of an overdraft benefit a business?

  Interest is paid only when used
• What can a bank demand regarding an overdraft?

  Full repayment within 24 hours
• What is trade credit?

  A credit agreement with suppliers
• When does a business typically pay for goods obtained through trade credit?

  After converting them into products
• What is a common term in a trade credit agreement?

  Credit limit
• What does the credit period refer to in trade credit?

  The time allowed to pay what is owed
• What is a common frequency of payment in trade credit agreements?

  Monthly
• What is a retrospective discount in trade credit?

  A discount for purchasing a certain amount
• What are personal savings in the context of business finance?

  Money saved by an entrepreneur
• What is venture capital?

  Investment in exchange for profit share
• What is share capital?

  Money raised through selling shares
• What rights do shareholders have when they buy shares?

  Part ownership and voting rights
• What is an advantage of share capital?

  It is a source of permanent capital
• What happens if a business has a poor year regarding dividends?

  No dividends are paid to shareholders
• What is a disadvantage of issuing more shares?

  It dilutes control for the founders
• How does a business become vulnerable to takeover?

  By selling more shares publicly
• What is a bank loan?

  Money lent with interest over time
• What is a key feature of a bank loan's interest rate?

  Usually fixed for the loan period
• What must a business do to obtain a bank loan?

  Apply and undergo credit checks
• What might a bank require to secure a loan?

  Assets against the loan
• What is retained profit?

  Profit reinvested in the business
• What is crowdfunding?

  Investing small amounts online by many people
• What is an advantage of crowdfunding?

  Acts as market research for ideas
• What is a disadvantage of crowdfunding?

  It can be difficult to reach funding targets
• What is business growth?

  Increased output over time
• Why is business growth an important objective?

  It can increase market share and profits
• How can a business achieve growth?

  By employing more people or increasing sales
• What is internal growth?

  Expansion through launching new products
• What is research and development in business?

  Work to innovate and improve products
• How might a soft drinks brand expand its product range?

  By introducing new flavors like vanilla cola
• What is the risk of entering new markets?

  Higher risk due to unfamiliarity
• What are three ways to enter new markets?

  Overseas markets, marketing mix, technology
• What does entering overseas markets provide?

  Access to new markets for growth
• Why is it important to amend the marketing mix when entering new markets?

  To appeal to the new market's needs