Funding and Financial Calculations 1

What is the primary use of short-term funding in businesses?

• To finance long-term investments like machinery

• To cover day-to-day expenses such as salaries and inventory

• To invest in stock market

• To purchase real estate

Which type of finance allows a business to sell its invoices at a discount to collect money owed by customers?

• Trade Credit

• Overdrafts

• Factoring

• Bank loans

What is a common characteristic of bank loans?

• They do not need to be repaid

• They are provided without interest

• They are repaid over a period of time with interest

• They are only for short-term financing

Which financing option is described as risky because the business owner is personally liable for the business debts?

• Personal Savings

• Leasing

• Grants

• Angel Funding

What is the role of business angels in financing a business?

• They provide short-term loans with high interest rates

• They rent out machinery and equipment

• They offer expertise and mentorship in addition to finance

• They fund only governmental projects

What is crowdfunding in the context of business finance?

• A method where a large number of people contribute large amounts of money

• A government funding program

• A method where a large number of people contribute small amounts of money

• A private investment from a single investor

What are retained profits?

• Profits distributed to shareholders

• Profits lost due to expenses

• Profits reinvested back into the business

• Initial profits used for setting up the business

How is sales revenue calculated?

• Quantity Sold + Selling Price

• Quantity Sold x Selling Price

• Selling Price - Quantity Sold

• Quantity Sold / Selling Price

What does gross profit represent?

• Total revenue minus expenses

• Sales revenue minus cost of goods sold

• Net profit plus expenses

• Cost of goods sold minus sales revenue

How is net profit calculated?

• Gross Profit + Expenses

• Gross Profit - Expenses

• Sales Revenue - Expenses

• Gross Profit x Expenses