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 is an example of an internal source of finance?

• Owners' Funds

• Trade credit

• Leasing

Which is an example of an external source of finance?

• Owners' Funds
• Sale of assets
• Retained profits
• Bank loan

What is an advantage of owners' funds?

• There will be little or no interest
• You can pay in smaller installments
• They take a long time to arrange
• You don't have to pay it back

What is the most likely source of finance for a small firm?

• A debenture

• Issuing shares

• A bank loan

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

Which of the following statements about bank loans is not true?

• Preferable for short time duration

• Interest rates make the loan more expensive

• Easy to get

• Usually cheaper than consistently using a bank overdraft

Case study: 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

• Bank loan

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

• Retained profits

• Share capital

• Angel investor

• Owner savings

Working capital is sometimes called as...

• life of money

• blood of business life

• life of soul

• life of human