Raising Finance | Edexcel A-Level Business (9BS0)
Raising Finance
- 90 questions
- 4 subtopics
- Theme 2: managing business activities
- Paper 2 and Paper 3
Raising finance opens Theme 2 and is examined on Paper 2.
It covers the money a business can find inside itself, the sources and methods open to it outside, what liability means for the people who own it, and the business plan and cash-flow forecast that persuade anyone to hand money over.
Sample questions from Raising Finance
Answer each one closed book first, then open the answer.
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Internal finance
What are two advantages of using retained profit as a source of finance?
Show the answer
It does not require external approval and does not incur interest costs. -
Internal finance
Why is the sale of assets considered a one-off source of finance?
Show the answer
Because once an asset is sold, it cannot be sold again, so it provides funding only once rather than on an ongoing basis. -
External finance
What is venture capital?
Show the answer
Finance provided by specialist firms or funds that invest in high-growth potential businesses in exchange for equity. -
External finance
Explain why venture capital investors typically want an active role in business decisions.
Show the answer
Because they invest in high-risk, high-growth businesses and want to protect their investment and help maximise returns through their expertise and guidance. -
Liability
Which types of business structure have limited liability?
Show the answer
Private limited companies (Ltd) and public limited companies (plc). -
Liability
Why do limited liability businesses generally find it easier to raise large amounts of capital?
Show the answer
Because investor risk is capped at the amount invested, making people more willing to provide substantial funds. -
Planning
State the formula for calculating the closing balance in a cash-flow forecast.
Show the answer
Closing balance = Opening balance + Net cash flow. -
Planning
Explain how cash-flow forecasts support applications for external finance.
Show the answer
They demonstrate to lenders that the business can meet repayment obligations by showing predicted cash availability.
The 4 subtopics
One subtopic is one session. Work down the list.
| Subtopic | What it covers | Questions |
|---|---|---|
| Internal finance | Owner's capital, retained profit and the sale of assets, with the case for and against each as a way of funding a business. | 19 |
| External finance | Family and friends, banks, peer-to-peer lending, business angels, crowdfunding and other businesses, and loans, share capital, venture capital, overdrafts, leasing, trade credit and grants. | 26 |
| Liability | Unlimited and limited liability, what each means for an owner's personal assets, and how liability shapes the finance a business can raise. | 17 |
| Planning | What a business plan contains and who reads it, and the cash inflows, outflows and closing balances that make up a cash-flow forecast. | 28 |
How the guide is worked
Answering a question from memory stores it far better than reading the answer again. The guide runs that as a fixed procedure on one subtopic at a time, about twenty minutes a session.
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Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
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Step 2 · Open book
Go back to the top. Read each printed answer and write it out in full, including the ones you had right.
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Step 3 · Closed book again
Same questions, same order, from memory. The gap between pass one and pass three is the session result.
Read the full method, the return schedule and the research behind it.
Nearby topics
Edexcel A-Level Business Active Recall Guide
Every topic, not just this one. 2,305 questions with their answers.