Financial Needs Quiz

What is start-up capital?

• Funds for expanding a business

• Funds for paying off debts

• Funds for starting a business

• Funds for daily operations

What does working capital represent?

• Long-term investments

• Total assets of a business

• Cash reserves only

• Current assets minus current liabilities

Which of the following is a type of long-term expenditure?

• Wages

• Rent

• Buildings

• Utilities

What is a disadvantage of using retained profit?

• It incurs interest charges

• It is not available to existing firms

• It reduces available cash for owners

• It must be repaid

What is a key advantage of using debt financing?

• Unlimited funds available

• No repayment required

• Quick and easy to arrange

• No interest charges

What is an overdraft?

• A type of long-term loan

• A bank allows spending beyond the account balance

• A form of equity financing

• A method of selling trade receivables

Which source of finance is typically used for real estate?

• Debentures

• Overdrafts

• Mortgages

• Trade credit

What is a disadvantage of leasing?

• Ownership is transferred immediately

• Payments can be very high

• It is a form of equity financing

• No maintenance is provided

What is the purpose of venture capital?

• To fund established firms

• To provide loans to large companies

• To support start-ups

• To finance personal expenses

What is a characteristic of public limited companies?

• They are not allowed to borrow money

• They cannot sell shares

• They have limited life

• They can raise money by selling shares to the public