1.8   raising finance - moodle
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1.8 raising finance - moodle

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  • Mini-whiteboards
  • Mini-whiteboards
  • Mini-whiteboards
  • Mini-whiteboards
  • Mini-whiteboards
  • Play the Dragon’s Den video clips – Parts 1 and 2.

1.8   raising finance - moodle 1.8 raising finance - moodle Presentation Transcript

  • Do Now!What do you need to buy?1) Ice-cream parlour2) Hairdressers3) Café4) Clothes storeHow might you fund this?
  • Raising Finance
  • Learning ObjectivesBy the end of this lesson you should be able to:1. Explain the difference between internal and external sources of finance2. Understand the various sources of internal and external finance3. Analyse the appropriateness of various sources of internal and external finance for different needs.
  • Internal Sources of Finance What are internal sources of Discuss in pairs and come up finance and where do they with…. come from? 3 advantages of this source Owners personal funds of finance. Friends and family Retained profit 3 disadvantages of this Income from the sale of an asset source of finance.LO1) Explain the difference between internal and external sources of finance
  • External Sources of Finance Loan Capital – Overdraft What is an overdraft? Temporary loan from a bank that allows a business to withdraw excess money from their account, up to an agreeable limit. Benefits Drawbacks 1. It is an ………….….. source of 1. …………… can be charged for use finance. of an overdraft. 2. Quick and …... .. to arrange. 2. Arrangement ……….. can be high. 3. Can be used to manage ……... flow 3. Overdraft can be ……….. at short when a business has a shortage. notice.LO1) Explain the difference between internal and external sources of finance
  • External Sources of Finance Loan Capital – Bank loan What is a bank loan? A sum of money lent for a fixed period of time, repaid over an agreed schedule. The cost of the loan is paid in interest. Benefits Drawbacks 1. ………… is fixed for the period of 1. …..…… is paid regardless of the loan. Making ……………. easier. whether the business is making profit. 2. The loan is …………. for set period. 2. The loan may have to be secured 3. The ……….. does not get a say in against a personal …………… how the business is run.LO1) Explain the difference between internal and external sources of finance
  • External Sources of Finance Share Capital What is a share capital? Money paid by an investor for a share in the business. What does this mean? Owners sell a share/ part ownership of the business. Capital does not have to be paid back. Shareholders paid through dividends when profits received. Business Angel Venture Capitalist • Individual wanting to invest • Professional Investor or business • Can invest between £10, 000 and • Can invest £250,000 or more £250,000LO1) Explain the difference between internal and external sources of finance
  • Overdraft, Loan or Share Capital? Can be used to manage cash flow when a business has a shortage? OVERDRAFTLO2) Understand the various sources of internal and external finance
  • Overdraft, Bank Loan or Share Capital? It may have to be secured against a personal asset. BANK LOANLO2) Understand the various sources of internal and external finance
  • Overdraft, Bank Loan or Share Capital? It be withdrawn at short notice. OVERDRAFTLO2) Understand the various sources of internal and external finance
  • Overdraft, Bank Loan or Share Capital? Capital does not have to be paid back. SHARE CAPITALLO2) Understand the various sources of internal and external finance
  • Overdraft, Bank Loan or Share Capital? Interest is paid regardless of whether the business is making profit. BANK LOANLO2) Understand the various sources of internal and external finance
  • Raising finance in action Watch the Dragon’s Den Video…. Find out more about the Kirsty’s brand.LO2) Understand the various sources of internal and external finance
  • Advising Businesses In pairs, you are to act as business advisors….. Suggest a suitable source of finance for each given business including the reasons for your choice. Prepare to feedback to the rest of the group.LO3) Analyse the appropriateness of various sources of internal and external finance for different needs.
  • Write on your whiteboard….A disadvantage of using your own money to raise finance.
  • Write on your whiteboard…. An advantage of a venture capitalist to raise finance.
  • Write on your whiteboard….A disadvantage of using share capital to raise finance.
  • Write on your whiteboard….An advantage of using a bank loan to raise finance.
  • Re-cap Learning ObjectivesYou should now be able to:1. Explain the difference between internal and external sources of finance2. Understand the various sources of internal and external finance3. Analyse the appropriateness of various sources of internal and external finance for different needs.