Essay
Unit 2 - P4 Business level 3
- Module
- UNIT 2 Business Level 3
- Institution
- Undefined
This is p4 for unit 2 btec business level 3
[Show more]
4 reviews
By: shikwahsadat234 • 6 year ago
By: sohail111 • 7 year ago
By: TammyB • 7 year ago
By: canates • 7 year ago
Content preview
Gustavo Prado P4P4- Identify a range of internal and external sources of finance for a selected business.
Finance Explanation Benefits Drawbacks
method
Owner’s Funds The money given to the There’s no need to pay any It could be invested elsewhere, earning
company by the owner. interest on the money. a higher profit
The owner might not have enough
funds to meet the needs of the
company.
Retained The money kept in the There’s no need to pay any Could have been invested elsewhere,
Profits business by the owner which is interest on the money. earning a higher profit
also known as retained profit The business may not have enough
on the balance sheet. retained profit to meet its needs
Shareholders may become unhappy if
this means lower dividend payments
Selling Assets All the items and products The business is using money it The business has to have something
owned by the company are already has – so no need to worth selling for this to be an option
sold and only used for the take on loans or pay any The business may sell something they
company. interest or charges later need
Overdraft The bank allows the business Very quick to arrange Only suitable for smaller amounts and
to draw more money from A good short term solution to a has to be repaid within a short amount
their bank account than they cash flow problem of time
actually have in it Interest or charges are paid
Trade Credit Items are bought from This gives the company more Can only be used to buy certain goods
suppliers on a ‘buy now pay money that can be used in the Bills usually have to be settled within
later’ basis future. 30,60 or 90 days
Debt Factoring The company sells a debt it is Allows the business to get Time consuming to arrange
owed to a debt factoring money for debts that might The business receives less money than
company who pay the otherwise never have been it was originally owed – this may affect
business a smaller sum than paid profitability
they were owed Saves the business time
chasing customers etc for
money owed
Used to help obtain new Cost of the asset is spread May be more expensive than buying the
Leasing equipment eg cars over its life asset – the owner will want to profit
The business rents the item from the deal
No need to find a lump-sum of
from its owner The business does not own the asset so
money to purchase it
it does not appear on the balance sheet
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller guztavo11. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £4.48. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
53022 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now