Work as a team to test each other. Is there a way that you remember that can help them if they get their answer wrong
1. What is a Trade Credit?
2. What is a Short term source of finance?
3. State ONE disadvantage of starting as a franchise
4. What is an Overdraft?
5. What is the advantage of a Private Limited Company (Ltd) selling shares to shareholders?
6. What is a Dividend?
7. What is Retained Profit?
8. What is Interest?
9. What is an advantage of using a Bank Loan as a source of finance?
10. What is a disadvantage of a business using their bank overdraft?
Teach Me Tell Me: One person is A the other is B
A: Test your partner first, then switch roles
1. What is a Trade Credit?
2. What is a Short term source of finance?
3. State ONE disadvantage of starting as a franchise
4. What is an Overdraft?
5. What is the advantage of a Private Limited Company (Ltd) selling shares to shareholders?
6. What is a Dividend?
7. What is Retained Profit?
8. What is Interest?
9. What is an advantage of using a Bank Loan as a source of finance?
10. What is a disadvantage of a business using their bank overdraft?
Teach Me Tell Me:
Test your partner, check each answer and then switch roles
Where a business buys materials and uses them but pays for them in 30/60/90 days
Finance that is used for day to day costs and paid back ASAP
Big upfront fee, part of profits go to franchisor, entrepreneurs are limited on decisions they can make, reputation fears
Where a business spends more money than they have in their bank account they go into their overdraft.
Raise finance
A share of the profits that goes to the shareholders as a reward for investing
Profit that a business makes and is reinvested back into the business
A charge by the lender on money that is borrowed
Quick source of funds, paid back
High Interest charges, the bank can take away the overdraft facility at any time
monthly to make it easy to budget for, no loss of control (like shares - looking at today)
Key Question 2 Assessment
UPCOMING...REVISE!!!
This will include a mixture of:
Multiple Choice
4 x Explain (ALL)
1 x Discuss (ALL + ALL or ALLLLL)
Business Studies Website
You will complete a Factual Recall assessment as part of your revision for this test
Factual Recall and Key Questions assessments
1.1.1 The dynamic nature of business
1.1.2 Risk and Reward
1.1.3 The role of business enterprise
1.2.1 Customer Needs
1.2.2 Market Research
1.2.3 Market Segmentation
1.2.4 The Competitive Environment
1.3.4 Sources of Finance
1.4.1 The options for start-up and small businesses
NOTE: THERE ARE NO CALCULATIONS IN THESE ASSESSMENTS SO NO NEED TO REVISE THESE
THEME 1 – INVESTIGATING SMALL BUSINESS
1.1 Enterprise and entrepreneurship
Dynamic nature of business
Risk and reward
Role of Business Enterprise
1.2 Spotting a business opportunity
Customer needs
Market research
Market segmentation
The Competitive Environment
1.3 Putting a Business Idea Into Practice
Business aims and objectives
Business revenues, costs and profits
Cash and cash-flow
Sources of business finance
1.4 Making the Business Effective
The options for start-up and small businesses
Business location
The Marketing Mix
Business Plans
Business Studies Road Map
1.5 Understanding External Influences on a Business
Business stakeholders
Technology and business
Legislation and Business
The economy and business
External influences
You are here
Sources of Finance
Over the next few lessons we will be looking at TWO different Sources of Finance:
Short Term
Source of Finance
Long Term
Sources of Finance
What is Share Capital?
What is a Share?
What is Capital?
What is Share Capital?
Part of a business that is sold to a SHAREHOLDER for a sum of money.
Money that is needed to start or grow a business
The money raised by a business from the sale of shares which can be used to GROW the business
Destination Question:
In this video ”Stocks” = “Shares”
Listen out for:
(i.e. profits shared)...SO?
Benefits of
Share Capital
Drawbacks of
Share Capital
Title - Share Capital
From the Point Of View of the business
Think, Pair, Share
You already know these pros/cons from discussions we have already had so think of Share capital compared to other sources
EXAM TECHNIQUE
Explain ONE advantage of a business using Share Capital to fund its growth (3 Marks)...support sheet on google classroom
Title - Share Capital
Explain ONE advantage of a business using Share Capital to fund its growth (3 Marks)
One advantage is
As a result
Therefore
Choose from one of these advantages to answer the question then develop WHY it is an advantage to the business…
Explain ONE advantage of a business using Share Capital to fund its growth (3 Marks)
One advantage is
As a result
Therefore
Choose from one of these advantages to answer the question then develop WHY it is an advantage to the business…
Peer/Live MARKING
Calculating “Interest” as a percentage on a loan - Write the formula in your books if you have not done so already
(Total Repayment - Borrowed amount)
Borrowed Amount
X 100
If a business borrowed £5,000 and their monthly payment over
2 years is £215 per month what is the percentage of interest on that loan?
£5,160 (£215 x 24 months) - £5,000
£5,000
X 100
£160
£5000
X 100
= 3.2%
Total amount of interest paid
Total amount repaid
Calculating “Interest” as a percentage on a loan
Calculating Interest as a percentage
If a business borrowed £55,000 and their monthly payment over
3 years is £1810 per month what is the percentage of interest on that loan?
£65,160 (£1810 x 36 months) - £55,000
£55,000
X 100
£10,160
£55,000
X 100
= 18.47%
Total amount of interest paid
Total amount repaid
Revenue, Costs, Profit/Loss, Break Even & Margin of Safety
Where a Private Limited Company (Ltd) sells shares in its business to invited people (shareholders)
Where a Public Limited Company (PLC) sells shares in its business to the public on stock exchanges
Where all the major decisions in a business are made in a central head office
Where the retained profits in a plc are reinvested into the business
What is Share Capital?