What is meant by owner's capital as a source of business finance?

Personal savings invested directly into the business by the owner to provide funding.

Does using personal savings to fund a business incur interest charges?

No, personal savings do not incur interest charges or require repayment to external parties.

Why might an entrepreneur prefer using personal savings over a bank loan when starting a business?

Personal savings avoid interest charges, repayment obligations, and do not require external approval.

Why might personal savings be an inadequate source of finance for a growing business?

Personal savings may be limited in amount, restricting the scale of business activity that can be funded.

What financial risk does an owner face when using personal savings to fund their business?

The owner bears the full financial risk if the business fails, potentially losing their entire investment.

Define retained profit.

The portion of net profit that a business keeps rather than distributing to owners.

Edexcel A-Level Business 9BS0

Meeting Customer Needs

Topic overview The market Market research Market positioning

The Market

Topic overview Demand Supply Markets Price elasticity of demand Income elasticity of demand

Marketing Mix and Strategy

Topic overview Product/service design Branding and promotion Pricing strategies Distribution Marketing strategy

Managing People

Topic overview Approaches to staffing Recruitment, selection and training Organisational design Motivation in theory and practice Leadership

Entrepreneurs and Leaders

Topic overview Role of an entrepreneur Entrepreneurial motives and characteristics Business objectives Forms of business Business choices Moving from entrepreneur to leader

Raising Finance

Topic overview Internal finance External finance Liability Planning

Financial Planning

Topic overview Sales forecasting Sales, revenue and costs Break-even Budgets

Managing Finance

Topic overview Profit Liquidity Business failure

Resource Management

Topic overview Production, productivity and efficiency Capacity utilisation Stock control Quality management

External Influences

Topic overview Economic influences Legislation The competitive environment

Business Objectives and Strategy

Topic overview Corporate objectives Theories of corporate strategy SWOT analysis Impact of external influences

Business Growth

Topic overview Growth Mergers and takeovers Organic growth Reasons for staying small

Decision-Making Techniques

Topic overview Quantitative sales forecasting Investment appraisal Decision trees Critical Path Analysis

Influences on Business Decisions

Topic overview Corporate influences Corporate culture Shareholders versus stakeholders Business ethics

Assessing Competitiveness

Topic overview Interpretation of financial statements Ratio analysis Human resources

Managing Change

Topic overview Causes and effects of change Key factors in change Scenario planning

Globalisation

Topic overview Growing economies International trade and business growth Factors contributing to increased globalisation Protectionism Trading blocs

Global Markets and Business Expansion

Topic overview Conditions that prompt trade Assessment of a country as a market Assessment of a country as a production location Reasons for global mergers or joint ventures Global competitiveness

Global Marketing

Topic overview Marketing Niche markets Cultural/social factors

Global Industries and Companies

Topic overview The impact of MNCs Ethics Controlling MNCs

Raising Finance

Internal finance

4 things to know
Paper 2 and Paper 3

Overview

Owner's capital, retained profit and the sale of assets, with the case for and against each as a way of funding a business.

What you need to know

Answer each one before you reveal it.

Your recallNot started

Evaluation

Evaluate personal savings as a source of finance.

Evaluation

Evaluate retained profit as a source of finance.

Evaluation

What are the risks of selling assets to raise finance?

Key term

What costs does a business avoid by using internal finance rather than external borrowing?

Questions from this subtopic

Each one with the model answer underneath.

1
What is meant by owner's capital as a source of business finance?
Model answer
Personal savings invested directly into the business by the owner to provide funding.
2
Does using personal savings to fund a business incur interest charges?
Model answer
No, personal savings do not incur interest charges or require repayment to external parties.
3
Why might an entrepreneur prefer using personal savings over a bank loan when starting a business?
Model answer
Personal savings avoid interest charges, repayment obligations, and do not require external approval.
4
Why might personal savings be an inadequate source of finance for a growing business?
Model answer
Personal savings may be limited in amount, restricting the scale of business activity that can be funded.
5
What financial risk does an owner face when using personal savings to fund their business?
Model answer
The owner bears the full financial risk if the business fails, potentially losing their entire investment.
6
Define retained profit.
Model answer
The portion of net profit that a business keeps rather than distributing to owners.

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Meeting Customer Needs

The Market

Marketing Mix and Strategy

Managing People

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Net gain = − initial cost.

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AGross profit equals revenue minus cost of sales.

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