G 11 Business Finance

Which of the following is a permanent source of finance?

• long-term loan

• retained profit

• overdraft

• sale of stock

Which of the following best describes working capital?

• Capital needed for capital expenditure

• Capital needed to start a business

• Capital spent on wages

• Capital needed for day to day expenditure

Which of the following statements is true?

• Businesses should aim to increase their working capital

• Businesses need working capital to impress investors

• Businesses need working capital because cash inflows and and cash outflows happen at different time

• None of the above

Increasing credit terms to costumers are likely to :

• upset costumers

• please costumers

• decrease working capital

• provide additional long term finance

Which is the most likely use for Debt factoring?

• Providing small amounts of finance for one-off problems

• Providing regular large amounts of finance

• Providing permanent finance

• To finance major long terms

Which of the following statements best describe debentures?

• Long term bonds issued by businesses

• Short term loans by banks to businesses

• A type of overdraft

• A loan that is secured against an asset

A public limited company wants to take over a competitor. This will involve a large amount of finance. The best source of finance is likely to be:

• an overdraft

• debt factoring

• taking on a new partner

• a share issue

A sole trader wants to increase the stock of products in his shop. The best source of finance is likely to be:

• a long term bank loan

• trade credit

• debentures

• mortgage

An advantage of taking on a new partner is that:

• it reduces the risk of a takeover

• it ensures the business will be able to get a loan

• the partner will bring additional finance

• the other partners will now have limited liability

Which sort of finance no need to be repaid

• Leasing

• Grants

• Retained profit

• Bank overdraft