539211
Description
Mind Map by louise.robson98, updated more than 1 year ago
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Created by louise.robson98
almost 11 years ago
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Unit 8- Finance 1
- Why does a growing business need finance?
- More storage
- New premises, vehicles, factory
- New premises, vehicles, factory
- More stock
- Training more staff to make products
- Training more staff to make products
- Diversification
- Spreads risk of the business failing into
different sectors
- Spreads risk of the business failing into
different sectors
- Advertising
- Easier for a growing business to obtain
finance as they have a credit history
- More storage
- Sources of finance for a growing business
- Debtors (external)
- Selling unwanted assets (internal)
- Using retained profits (internal)
- Selling more shares (external)
- Loan or mortgage (external)
- Debtors (external)
- Profit and Loss Accounts
- Purpose
- Calculates retained profit
- Legal requirement
- Public Limited Companies accounts
have to be public (so potential
shareholders can view previous
accounts)
- Calculates retained profit
- 3 parts
- Trading Account
- Calculates: Gross Profit= Revenue- Cost of sales
- Calculates: Gross Profit= Revenue- Cost of sales
- Profit and Loss Account
- Calculates: Net Profit= Gross profit- Operating costs
- Calculates: Net Profit= Gross profit- Operating costs
- Appropriation Account
- Calculates: Net Profit before tax= Net Profit- Interest
- Calculates: Retained Profit=
Net Profit before tax- taxation
and dividends
- Calculates: Net Profit before tax= Net Profit- Interest
- Trading Account
- Purpose
- Balance Sheets
- Shows where the money has gone
- Assets must equal liabilities
- Assets= Something
the company owns
- Fixed Assets= Hard to turn into
cash easily i.e. properties and
vehicles
- Current Assets= Easier to turn into
cash i.e. cash in hand and stock
- Fixed Assets= Hard to turn into
cash easily i.e. properties and
vehicles
- Liabilities=
Something the
business owes
- Long term= Mortgage
- Short term= Trade
Creditors, Tax on
profits, bank loans
- Long term= Mortgage
- Shows where the money has gone
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