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WorksheetsSources of Finance - Unit - Business Finance
Total questions: 41
Worksheet time: 21mins
What is the most likely source of finance for a small firm?
A debenture
Issuing shares
A bank loan
What is the most likely source of finance for buying property?
Mortgage
Factoring
A bank loan
What is the most likely source of finance for buying a new IT system?
Mortgage
Factoring
A bank loan
What of the following is a source of internal finance?
Selling assets
Trade credit
A bank loan
This is the cash that is generated by the business when it operates successfully
Retained profits
Share capital
Angel investor
Owner savings
Which of the statements about retained profits is false?
You have unlimited amounts of money available
Shareholders and employees could be frustrated because there is less profit to be 'shared out'
You do not have to pay interest
You are free to use it for any purpose
Which of the following is NOT usually considered a personal source of finance.
Savings
Redundancy payments
Crowdfunding
Credit card
An amount of money that is paid back within an agreed amount of time, with interest
Bank loan
Angel investment
Overdraft
Retained profit
Which of the following statements about bank loans is not true?
Usually used for large amounts of money that need to be paid back over a longer time-frame
Interest rates make the loan more expensive
Easy to get
Usually cheaper than consistently using a bank overdraft
A short-term source of finance from a bank that usually is only used in an emergency/when needed
Overdraft
Loan
Share capital
Credit card
Which of the following statements about overdrafts is not true?
Short term source of finance
It's really a small, short term loan
It's flexible, in that it can be used whenever it is needed
Cheap - the interest rate is usually lower than that of a long-term bank loan
Wealthy individuals who invest in high-potential businesses are...
Banks
Angel Investors
Shareholders
Crowdfunders
What do Angel Investors and Crowdfunders have in common?
They require something in return for their investment
They charge interest on money invested in the buisness
They become part-owners of the business
They are incredibly wealthy
Case study: the Business Incubator team 'TradeTools' - an online platform connecting neighbors who want to rent tools with neighbours that own them. They will pitch their business concept in May - what would be the most appropriate source of finance for this new, untested idea?
Angel Investor
Bank loan
Personal savings
Credit cards
True or false - crowdfunding is usually only used for new business start-ups/concepts and is therefore inappropriate for existing large, profitable businesses
True
False
Wealthy entrepreneurs who risk personal funds by investing in innovative business start-ups with large risks but also exceptional returns
Shareholders
Business angels
Sole traders
Venture capitalists
Investments in fixed assets
Deficit Expenditure
Capital Expenditure
Revenue Expenditure
Debtoring Expenditure
A financial service where a third party purchases outstanding debt obligations to a firm - but at a discounted rate
Capital factoring
Debt factoring
Capital credit
Equity factoring
When a firm rents fixed assets from a third party
Loan capital
Debt factoring
Leasing
Net capital
Medium - to long-term interest-bearing source of financing with fixed repayment, usually with collateral securities
Loan capital
Share capital
Equity capital
Working capital
Provide opportunities for short-term debt financing in excess of available cash but are repayable on demand
Discounted Cash Flows
Overdrafts
Subsidies
Grants
The funds that the firm uses to internally finance growth
Capital employed
Current assets
Long-term finance
Retained profit
What is an advantage of a business using owner's capital as a source of finance?
Very low rate of interest
It will bring new skills to the business
It doesn't need repaying
Repayment is always spread over a period time
What type of finance involves less profit going to the owners?
Retained profit
Sale of assets
Overdraft
Owner's capital
What source of finance often requires no interest, equity, security or repayment?
Bank loan
Crowdfunding
Taking on a new partner
Overdraft
Which of these sources of finance is likely to charge the most interest?
Trade credit
Retained profit
Bank loan
Overdraft
What source of finance will lead to the owners taking a smaller share of the profits?
Bank loan
Taking on a new partner
Crowdfunding
Trade Credit
Which of the these sources of finance is least useful for dealing with cash-flow issues?
Trade Credit
Crowdfunding
Overdraft
Owner's Capital
