What does Theme 2.1 Raising finance cover in Edexcel Business?

Theme 2.1 covers internal and external sources of finance and the methods of finance, the link between liability and finance, the role of business plans and cash-flow forecasting in raising finance, and the calculation of sales volume, sales revenue, fixed, variable and total costs and profit.

How do you calculate a closing cash balance in a forecast?

Net cash flow equals total inflows minus total outflows for the period. The closing balance equals the opening balance plus net cash flow, and that closing balance carries forward to become the next period's opening balance.

What is the difference between fixed and variable costs?

Fixed costs such as rent, insurance and salaries do not change with the level of output. Variable costs such as raw materials and packaging rise as output rises. Total cost is fixed cost plus total variable cost, and profit is total revenue minus total cost.

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Edexcel A-Level Business Theme 2.1 Raising finance: complete overview

A complete overview of Edexcel A-Level Business Theme 2.1 Raising finance, covering internal and external sources and methods of finance, liability and finance, business plans and cash-flow forecasting, and sales, revenue and costs.

Generated by Claude Opus 4.88 min read9BS0Updated 2026-06-02

Reviewed by: AI editorial process; not yet individually human-reviewed

Jump to a section

Sources and methods of finance
Liability and finance
Planning and cash flow
Sales, revenue and costs
How to study Theme 2.1

Theme 2.1 Raising finance opens the finance half of the course. It asks where a business gets its money, how its legal form shapes the options, and how planning and the numbers persuade lenders to back it. This overview maps the topic; each section links to a full dot-point answer.

Sources and methods of finance

Internal finance comes from owners' capital, retained profit and the sale of assets. External finance comes from banks, family and friends, peer-to-peer lending, business angels, crowd funding, venture capital, share capital, leasing, trade credit and grants. The right choice depends on amount, cost, purpose and control.

Liability and finance

A firm's liability shapes its options. Unlimited liability firms rely on owners' capital, loans and retained profit; incorporation and limited liability open up share capital and ease borrowing, at the cost of regulation and some control.

Planning and cash flow

A business plan persuades investors, and a cash-flow forecast predicts the timing of inflows and outflows. Net cash flow plus the opening balance gives the closing balance, which carries forward.

Sales, revenue and costs

Sales revenue is price times quantity. Fixed and variable costs add to total cost, and profit is revenue minus total cost. These numbers underpin break-even, pricing and the financial plan.

How to study Theme 2.1

Drill cash-flow calculations. Net cash flow and closing balance are reliable marks.
Match source to situation. Justify a source for the specific firm and need.
Separate cash from profit. A profitable firm can still run out of cash.
Revise from the official specification. Use the current Pearson Edexcel 9BS0 document.

For the full specification, see Pearson Edexcel.

Sources & how we know this

Pearson Edexcel A-Level Business (9BS0) specification — Pearson Edexcel (2015)