WorksheetsDo you know the right source of finance?
Total questions: 23
Worksheet time: 12mins
This is the cash that is generated by the business when it operates successfully
Retained profits
Share capital
Angel investor
Owner savings
What does internal source of finance mean?
A source from within the business
A source from outside the business
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 a typical use of short-term finance?
Buying a house
Covering immediate expenses
Managing cash flow
Purchasing inventory
What are the long-term external sources of finance?
bank loan
leasing
hire purchase
overdraft
It is normally used to pay for items that will be used for many years.
short-term
long-term
Businesses can sell the debts of their customers to debt-factoring companies.
overdraft
bank loan
debt factoring
Leasing is a synonym of renting (machinery, buildings, equipment..)
True
False
This means that the businesses do not pay the supplier straight away.
overdraft
trade credit
debt factoring
Raising money from inside the business
internal
external
Capital raised outside the business.
internal
external
A place from which we can get something.
internal
external
source
Which of the following are DISADVANTAGES of selling shares as a source of finance? (select as many as appropriate)
It means limited liability for the owners
Dividends need to be paid to shareholders
Large sums of money can be raised
Does not apply to Partnerships or Sole Traders
Which of the following is an example of start-up capital?
Buying new technology to replace outdated systems
Paying rent for office space before the business opens
Replacing delivery vans with newer models
Expanding into a new market
Which of the following best explains why a business might need finance for expansion?
To cover short-term debts
To buy personal assets for the owner
To open new branches or increase production capacity
To pay for daily expenses like electricity
Which type of finance is most likely needed when a business invests in new technology?
Personal finance
Long-term finance
Short-term finance
Grants
Additional working capital is required when:
The business wants to expand into a new market
The business cannot pay day-to-day expenses such as wages and raw materials
The business wants to purchase new buildings
The business wants to increase its fixed assets
Which of the following is a short-term need for finance?
Building a new factory
Buying raw materials
Purchasing new machinery
Expanding into a foreign market
Long-term finance would be most appropriate for:
Paying electricity bills
Replacing office computers every month
Buying land for a new factory
Paying suppliers within 30 days
Which of the following is the best definition of short-term finance?
Finance needed for more than 10 years
Finance needed for less than one year
Finance needed for 5 years or more
Finance used for expansion
A business borrowing money for 15 years to construct a new headquarters is an example of:
Working capital finance
Short-term finance
Long-term finance
Internal finance
A café owner needs to buy milk, coffee beans, and sugar to keep the café running. What type of finance is needed?
Long-term finance
Short-term finance
Venture capital
Mortgage loan
