Easy Debt Financing Flashcard

Front

What is debt financing?

Back

Borrowing money that must be repaid

Front

Which is an example of debt financing? Options: Taking a bank loan, Selling company shares, Receiving donations, Winning the lottery

Back

Taking a bank loan

Front

What is a short-term loan?

Back

A loan you repay in a few months or a year

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Which of these is NOT debt financing? Credit card loan, Bank loan, Borrowing from a friend, Selling shares in a company

Back

Selling shares in a company

Front

What do businesses pay when they take a loan?

Back

Interest

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Why do companies use debt financing?

Back

To raise money for business expenses

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What happens if a business doesn’t repay its loan?

Back

The business may go bankrupt

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Which of these is a long-term debt financing option? Bank overdraft, Credit card loan, Bonds, Trade credit

Back

Bonds

Front

What do companies use bonds for?

Back

To raise money from investors

Front

What does “interest” mean in debt financing?

Back

A fee charged for borrowing money