Financing. Definitions. ASSETS- things that are owned and have monetary value. CURRENT ASSETS – things that are owned and tend to be impermanent in value or form. Examples are cash, inventory, and prepaid expenses.
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BANKRUPTCY – when a business does not have sufficient assets or earning power to repay its debts and legal action is taken to dissolve the company and compensate the creditors as much as is possible.
CREDITORS – those to whom a business owes money
REVENUE – the income of a business from sales
How will you finance your business?
Loans and mortgages
from banks, credit
unions and others
Prepare loan or grant
Debt Financing – when someone raises money for a business by borrowing money from another individual or another investor. The person must promise to pay back the debt’s principal with interest.
Equity Financing – when someone raises money for a business by selling common or preferred stock to individuals or other investors. The shareholders receive ownership interests in the corporation.