Long Term Sources of Finance

This is the cash that is generated by the business when it operates successfully

• Retained profits

• Share capital

• Angel investor

• Owner savings

Which of the statements about retained profits is false?

• You have unlimited amounts of money available

• Shareholders and employees could be frustrated because there is less profit to be 'shared out'

• You do not have to pay interest

• You are free to use it for any purpose

What is an advantage of a bank loan?

• There will be little or no interest

• You can pay in smaller installments

• They are quick and easy to arrange

• You don't have to pay it back

This type of finance does not need to be repaid.

• Bank Loan

• Overdraft

• Mortgage

• Government Grant

The source of finance that is provided by the Owners is called

• Finance

• Capital

• Asset

• Loan

Which of the following statements about personal sources of finance is false?

• Often cheaper in the long-term

• Less delay in getting the cash

• Less personal financial risk for the entrepreneur

• May be harder to raise large amounts

An amount of money that is paid back within an agreed amount of time, with interest

• Bank loan

• Angel investment

• Overdraft

• Retained profit

Which of the following statements about overdrafts is not true?

• Long term source of finance

• It's really a small type loan

• It's flexible, in that it can be used whenever it is needed

• Cheap - the interest rate is usually lower than that of a long-term bank loan

Wealthy individuals who invest in high-potential businesses are...

• Banks

• Angel Investors

• Shareholders

• Creditors

Apple plans to develop a prototype for an iPhones with a flexible display. Which of the following sources of finance would be most appropriate

• Retained profits

• Selling shares

• Overdraft

• Bank loan