Sources of Business Finance

The initial capital contributed by the entrepreneur is suffiecient to take care of all financial requirements of the business.

• True

• False

The financial needs of a business can be categorised into __________ categories.

• 4

• 2

• 6

• 3

Identify the medium term sources of finance.

• Loan from banks

• Public deposits

• Equity share

• Trade credit

• Loans from Financial instituions

Identify which point / points is/are not a characteristics of Debentures.

• Debenture holders control the business with right to vote.

• It represent borrowed funds.

• Repayment period is predetermined

• They are permanent source of business.

• They are the owners of company.

What are ' Development banks ' also know as?

• Custodian

• Commercial Banks

• Depository

• Financial instituions

Identify which one is/ are not fixed charge funds.

• Debentures

• Equity share

• Loans from financial institutions

• Retained earnings

• Term loans from commercial banks

Identify the limitations of financial institutions.

• Follow rigid criteria for grant of loans

• No tax saving

• No assured return for the lender

• Restrictions may be imposed

• Complex procedure

Quest Corp a company dealing in electronics is planning to expand their business on account of growing demand of consumers electronics. So the company requires additional funds. The finance manager reported that company is not in a position to bear extra burden of explicit cost and equity shareholders insisted not to issue more shares as there is risk of losing control.

On the basis of the given information about Quest Corp., answer the following questions:

(a) Suggest a source of fund most suitable for the company.

• Debenture

• Public deposit

• Retained earning

• Trade credit

Shares which have a fixed rate of return but have the option of participating in profits.

• Debentures

• Equity share

• Participating preference share

• Convertible preference share

Into how many broad categories sources of finance be categorised?

• 2

• 3

• 4

• 6