Edexcel A-Level Business Theme 2.1 Raising finance overview quiz quiz

A bank loan

Retained profit

Crowd funding

A government grant

Arranging a bank overdraft facility

Taking trade credit from suppliers

Issuing new shares

Using retained profit

Sole traders are always too small to attract any outside investors

Issuing shares is illegal for any newly established trading firm

Banks forbid sole traders from offering shares

Only incorporated companies can issue shares

Limited liability and access to share capital

Unlimited liability for all the company's business debts

Complete freedom from all financial regulation and reporting

A legally guaranteed annual profit for the owners

$3,000

$7,000

$1,000

$22,000

Profit and cash are always exactly equal, so this can never actually happen

Because the business has been granted limited liability status

Poor timing of inflows and outflows, such as customers paying late

Because the business chose to issue new shares

$13,000

$2,015

$15,000

$30,000

Annual factory rent

Raw materials used in production

Packaging per unit

Piece-rate wages

$2,000

$22,000

$120,000

$10,000

To completely replace the need for any cash-flow or sales forecasts at all

To provide a cast-iron guarantee that the business will succeed

To persuade lenders and investors the venture is viable and worth funding

To help the owners avoid paying any business tax