Business Finance Sources Assessment

What is working capital primarily used for in a business?

• Purchasing fixed assets

• Day-to-day running expenses

• Long-term investments

• Issuing debentures

Which of the following is an advantage of retained profit as a source of finance?

• It's available to new businesses

• It increases owner's share immediately

• No interest payments required

• It's quick to arrange

What is a key disadvantage of debt factoring?

• It requires collateral

• It takes too long to process

• The factor takes a percentage of collected debts

• Interest rates are too high

Which source of finance is exclusively available to limited companies?

• Bank loans

• Trade credit

• Crowdfunding

• Share issues

What is a characteristic of debentures?

• They don't require repayment

• They are short-term loans

• They must be repaid after a specified period

• They give voting rights

Which is an advantage of leasing as a source of finance?

• The asset becomes business property immediately

• Maintenance is handled by the leasing company

• It's cheaper than purchasing

• No monthly payments required

What is a key feature of microfinance?

• Only available to large corporations

• Requires substantial collateral

• Provides small sums to developing businesses

• Only offers long-term loans

Which factor would make a bank more likely to lend money?

• Verbal business plans

• No collateral available

• Presenting a cash flow forecast

• Hidden existing loans

What is an advantage of trade credit?

• Long-term financing option

• Provides ownership rights

• No interest payments required

• Immediate cash availability

What is a characteristic of hire purchase?

• No initial deposit required

• Monthly installments include interest

• Immediate full ownership

• No maintenance costs