1. FM Continued 2
In class discussion:
What were the main points from
last lesson

2. Questions
 Pg 354 q1

3. Short term and Long Term Finance
 Finance can either be short term - 3 years
 Medium (3 – 10 years)
 Long Term (more than 10 years)
 To sum up, the longer you borrow, the
more money in interest you will pay the
lender. It is in the interest of the business
to pay their debts off quicker.
 Business must therefore determine the
type of finance they need.

4. Finance Types
 Equity
 Owner injects capital into the business. This capital is
raised through internal sources. A negative is that it
is restricted to what the owners can get or put into it.
 Debt
 Borrowing money to inject into a business
 Cost of finance
 This is the interest payable on monies borrowed. The
company must know the principle and interest
portions of the repayments and fit these into forecasts
to assist the cash flow.

5. Questions
 Pg 355 Q1, 2, 3, 4 and 7