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WorksheetsFinancing a Business - Test
Total questions: 38
Worksheet time: 19mins
What is the primary purpose of financing a business?
To maximize profits
To minimize expenses
To obtain necessary funds for operations and growth
To secure a competitive advantage
Financing a business is primarily done to ______.
maximize profits
minimize expenses
obtain necessary funds for operations and growth
secure a competitive advantage
The process of funding a new business or venture by a large number of investors over the internet is called:
Angel investors
Crowdfunding
Peer-to-peer lending
Venture capital
Websites like Kickstarter.com and GoFundMe.com bring together investors and borrowers that both can benefit financially. These would be examples of:
Commercial loans
Crowdfunding
Peer-to-peer lending
Venture capital firms
Websites like Kickstarter.com and GoFundMe.com are examples of ________, which bring together investors and borrowers.
Commercial loans
Crowdfunding
Peer-to-peer lending
Venture capital firms
In addition to the financial support, one of the benefits of being funded by a venture capital firm is that it comes with:
Full control of the business
Guidance and advice
Lines of credit
The freedom to make decisions
Which of the following is NOT a source of short-term funding for a business?
Commercial paper
Factoring
Selling newly issued stock
Trade credit
Jasmine decided to sell her accounts receivable at a discount to another company. This process is known as ______.
Factoring
Retained earnings
Short-term bank loans
Trade credit
Ben’s Hardware Store receives most of its goods from suppliers without requiring payment at the time of delivery, essentially being able to “buy now, pay later.” This type of financing is called:
Factoring
Retained earnings
Short-term bank loans
Trade credit
In order to avoid negotiating a separate loan each time they need more funds, many companies work out arrangements with their bankers to obtain pre-approval so that they can draw on funds as needed. An example of this would be using:
A factor
A line of credit
A trade credit
Retained earnings
Any profits that are earned and reinvested into a company are called:
Debt financing
Line of credits
Retained earnings
Revolving credits
Fill in the blank: The process of reinvesting profits back into a company is known as ______.
Debt financing
Line of credits
Retained earnings
Revolving credits
Short-term promissory notes issued by large corporations to finance their business are called:
Commercial paper
Covenants
Factors
Short-term bank loans
Raising funds for a company by issuing bonds or borrowing from banks are examples of:
Debt financing
Equity financing
Retained earnings
Trade credit
Which of the following is NOT an example of long-term financing for a business?
Debt financing
Equity financing
Retained earnings
Trade credit
Fill in the blank: _______ is a form of financing where a company uses its profits to reinvest in the business rather than distributing them to shareholders.
Debt financing
Equity financing
Retained earnings
Trade credit
Selling newly issued stock is an example of:
Commercial paper
Debt financing
Equity financing
Retained earnings
A measurement of a company's health and indicates the extent to which a company relies on debt financing is called:
Capital structure
Debt financing
Debt-to-asset ratio
Equity financing
Fill in the blank: The extent to which a company relies on debt financing is measured by the ______.
Capital structure
Debt financing
Debt-to-asset ratio
Equity financing
One of the benefits of using equity financing is:
The agreements to covenants
The opportunity to use financial leverage
The tax benefits
Repayment is not required
One of the downsides of using debt financing is:
The agreements to covenants
Ability to grow the business
The tax benefits
Repayment is not required
All of the following are components of a budget except:
Current assets
Revenue Projection
Operating Expenses
Contingency Fund
Cash and other assets that can be converted into cash within the next year are called:
Current assets
Debt financing
Equity financing
Retained earnings
Fill in the blank: Accounts receivable and inventory are examples of ______.
Cash and cash equivalents
Current assets
Equity financing
Retained earnings
All of the following are considered long term assets except:
Land
Accounts Receivable
Buildings
Machinery
Requirements that a business agrees to when borrowing money are called:
Refusal
Covenants
Rejection
Disclaimer
A way for a company to raise capital by selling shares of the company in exchange for cash
Equity Financing
Debt Financing
Trade Credit
Commercial Paper
Which type of financing is needed to pay for the current operating activities of a business (1-2 months-a year)?
start-up financing
short-term financing
long-term financing
The amount of money needed to open the business.
improvement
innovation
start-up financing
crowdfunding
Jeff and Ahmedin are partners in a tech startup. They are considering taking out a bank loan to expand their business. This approach is known as...
equity financing
bootstrapping
debt financing
preferred stock
___ is money provided by large investors to finance new products and new business that have a good chance of being profitable.
Venture capital
Loans
Capital
Investments
Which type of financing is needed to pay for the current operating activities of a business (1-2 months-a year)?
start-up financing
short-term financing
long-term financing
Retained earnings are often used for:
Paying off long-term debt.
Distributing dividends to shareholders.
Financing new projects and expansion.
Buying back company shares.
What is a primary advantage of debt financing?
It does not require repayment.
Interest payments are tax-deductible.
It dilutes ownership of the company.
It is not subject to interest rate fluctuations.
Expenses encompass the day-to-day costs of running a business
Operating Expenses
Debt Service
Contingency Fund
Revenue Projection
Involves estimating the income a business anticipates generating from its various sources, including sales, services, and any other revenue streams.
Operating Expenses
Revenue Projection
Contingency Fund
Capital Expenditures
Capital Expenditures
Investments in assets that enhance a company's capabilities and operations include all of the following except:
Machinery
Equipment
Technology
Salaries
The three main components of the balance sheet are:
Profit, Income, Taxes
Crowdfunding, Venture, Investors
Assets, Liabilities, Shareholder's Equity
Income, Revenue, Profit
