Unit 3 (1 to 4)

• Capital expenditure refers to investment spending on fixed assets like machinery and land
• Collateral is a financial guarantee used to secure external loan capital for financing investment expenditure
• Fixed assets are items owned by an organization that serve a long-term function for a business, typically more than 12 months
• Revenue expenditure involves spending on the day-to-day running of a business, including expenses like rent, wages, and utility bills
• Business Angels:

  • Wealthy entrepreneurs who invest their own money in small to medium-sized companies with high growth potential
• Capital expenditure:

  • Investing in fixed assets like land and buildings
• Debt factoring:

  • A financial service where an external company (factor) collects debts for a fee
• External sources:

  • Sources of finance from outside the business or its present owners
• Internal sources:

  • Sources of finance within the business or provided by its present owners
• Leasing:

  • A form of hiring where a leasing company (lessor) rents an asset to a customer (lessee) over a given period, while remaining the owner of the asset
• Loan:

  • Money borrowed from an external source to finance the business
• Long-term finance:

  • Finance required for a period exceeding ten years
• Medium-term finance:

  • Finance required for a period between three and ten years
• Overdraft:

  • An arrangement with a bank to borrow money over a specified period
• Revenue expenditure:

  • Spending money on the day-to-day running of the business, like wages and rent
• Short-term finance:

  • Finance required for a period up to three years
• Venture Capital:

  • High-risk capital invested by venture capital firms, typically at the start of a business