WorksheetsFINANCIAL MODEL QUIZ - CANVAS FORMAT
Total questions: 10
Worksheet time: 5mins
What are the three categories of long-term finance?
Share Capital, Loan Capital, Retained Profits
Assets, Liabilities, Equity
Revenue, Expenses, Profit
Cash, Inventory, Receivables
What do shareholders expect in return for their investment?
Interest payments only
Guaranteed annual returns
Dividends and Growth
Fixed monthly payments
Is there a legal obligation for a company to pay dividends?
Yes, dividends must be paid quarterly
No, there is no legal obligation
Yes, but only to majority shareholders
Yes, based on the previous year's profit
Who owns the business when share capital is used?
The Chief Executive
The Board of Directors
The Shareholders
The Government
What is loan capital?
Money invested by shareholders
Money borrowed that must be repaid with interest
Profits kept within the business
Assets sold to generate cash
What will a lender require when providing loan capital?
Only a business plan
Interest, eventual repayment, and security/collateral
Ownership shares in the company
A percentage of future profits
What is retained profit?
Money borrowed from banks
Dividends paid to shareholders
Money the business has made itself and reinvested
Interest payments on loans
Why is retained profit considered the cheapest source of long-term finance?
It requires no interest payments or dividends
It comes from government grants
It has the lowest tax rate
It can be used without restrictions
What happens if business performance does not meet shareholder expectations?
Nothing, shareholders have no power
The company must pay higher dividends
Directors may be dismissed, investors may sell shares, making the business vulnerable to takeover
The business automatically goes bankrupt
According to the presentation, what competitive advantage does retained profit provide?
Higher interest rates
Better credit ratings
It is the cheapest source of finance, avoiding dividend and interest payments
Increased share prices
