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Business:SOF

T5

QuestionAnswer
Owners capital: Advantages - No need to repay the money - No interest has to be paid - No cost to raise the finance - Readily available
Owners capital: Disadvantages -The owner might not have enough savings to cover the whole finance -May leave the owners short in personal situations
Retained Profit: Advantages - No interest has to be paid - No need to repay the money - No cost to raise the finance - Readily available
Retained Profit: Disadvantages - Business might not have enough profit profit to cover the whole finance - May leave the business short in the future in emergency situations
Loan: Advantages - Repayment is spread over time - Business knows exactly how much has to be repaid and when -Money is available quickly
Loan: Disadvantages - Interest has to be paid - Business may need to risk an asset as security - Bank will want to see a business plan to ensure they can afford the loan
Issuing Shares: Advantages - A lot of finance can be raised from many investors - Money does not have to be paid back - No interest is payable
Issuing Shares: Disadvantages - Dividends may have to be paid to shareholders - Shareholders are entitled to have a say in the running of the business - The business may be taken over by a competitor
Interest The amount of money that has to be paid back on borrowed money
Crowd funding Money raised through an appeal to public
Retained Profit Profit not distributed to owners
Owners capital Money from savings put into the business by the owner
Sale of assets Items sold by the business
Overdraft An arrangement with the bank to spend more money than it has in its account
Loan Sums borrowed for a certain period at an agreed rate of interest
Created by: lil.dripz
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