Understanding Business Finance Concepts

This video tutorial covers the essentials of business finance, including the reasons businesses need finance, the differences between short-term and long-term finance, and the main sources of capital. It also explores alternative finance options like microfinance and crowdfunding, and discusses factors to consider when making financial choices. The video aims to equip students with the knowledge to make informed financial decisions in business contexts.

Why do businesses need finance?

• To pay taxes

• To start up, expand, and manage daily operations

• To close down operations

• To hire new employees

What is the difference between short-term and long-term finance?

• Short-term is more than a year, long-term is less than a year

• Short-term is less than a year, long-term is more than a year

• Both are more than a year

• Both are less than a year

What does capital expenditure refer to?

• Money spent on daily expenses

• Money spent on fixed assets for long-term benefits

• Money spent on employee salaries

• Money spent on marketing

Which of the following is an internal source of finance?

• Government grants

• Crowdfunding

• Bank loans

• Retained profits

What is a disadvantage of selling existing assets?

• Requires paying interest

• Takes time to sell at a reasonable price

• Increases debt

• Involves legal issues

What is a benefit of selling shares as an external source of finance?

• No need to repay capital

• Immediate cash flow

• Guaranteed profits

• No loss of control

What is debt factoring?

• Receiving government grants

• Selling unpaid invoices to receive money quickly

• Borrowing money from banks

• Selling shares to investors

What is microfinance?

• Small loans and financial services for those without access to traditional banking

• Government grants for small businesses

• Crowdfunding for large projects

• Large loans from banks

What is crowdfunding?

• Obtaining a government grant

• Raising small amounts of money from a large number of people

• Receiving a large loan from a single investor

• Selling company shares to the public

Which factor is NOT considered when making financial choices?

• Time and amount needed

• Legal form of the business

• Purpose of the finance

• Weather conditions