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This lesson we will be learning about... Raising Finance (Which is suitable) What are ‘cash flow problems’

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Presentation on theme: "This lesson we will be learning about... Raising Finance (Which is suitable) What are ‘cash flow problems’"— Presentation transcript:

1 This lesson we will be learning about... Raising Finance (Which is suitable) What are ‘cash flow problems’

2 Candidates need to be familiar with the main methods that a large business might use to raise funds. These include: retained profits, a new share issue, obtaining a loan and share capital. Candidates should be able to recognise the use and disadvantages of each method for a given situation. NO IDEA I NEED HELP NEVER HEARD OF IT OK I CAN DO THIS WITH SUPPORT SOME GUIDANCE NEEDED NEARLY AT MY TARGET GOT IT! VERY CONFIDENT WILL HIT MY TARGET GRADE EXCEED TARGET

3 NO IDEA I NEED HELP NEVER HEARD OF IT OK I CAN DO THIS WITH SUPPORT SOME GUIDANCE NEEDED NEARLY AT MY TARGET GOT IT! VERY CONFIDENT WILL HIT MY TARGET GRADE EXCEED TARGET Success Criteria < C All definitions are clear Exam context clear C > Should be able to include examples to support understanding B > Should be in a business context A >QOWC and SPAG

4 What situations might arise which need funding?

5 What situations might arise which need funding? New product development Advertising campaigns Growth to another area of business (diversification) New premises More employees (increased production) Financial hardship (recession, natural disaster)

6 KEY TERMS Equity Capital / Share Capital – Funds raised by issuing shares, in return for cash. Therefore selling a proportion of the business. Over drafts – An agreement with the bank, to use additional funds in your bank account. Going into a negative balance. This is short term and not suitable for large amounts. Loans – Borrowing of money from a financial institution e.g. Bank Retained Profits – Profits from the previous years trading which have been saved to be reinvested in the business.

7 Situations and Suitable Funding 1.JOINER - A huge bill will leave our account before a contract pays up next month. 2.TAXI FIRM - We need 3 more cars to cover increased demand. 3.PRIMARK - We want to grow globally and hit the US market. 4.BARBIE – We want to product and manufactory a new doll for Christmas

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