Week 7 Financial Management

Which of the following is the short term sources of finance?

• Bank loan

• Overdraft

• Venture Capital

Which of these is the correct definition of trade credit?

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  Trade credit is where a business can spend more money than it has in its bank account

• Trade credit is money the business owners have invested through their own savings

• Trade credit is an agreement with a supplier to pay bills at a later date

Which of these is the long term sources of finance?

• Share Capital

• Trade Credit

• Overdraft

Which list identifies only long term sources of finance?

• Personal savings, loans and crowd funding

• Overdrafts, trade credit and crowd funding

• Equity, Debt, Long term loan

What is the meaning of retained profit?

• Profit paid to shareholders

• Profit made by the business

• Profit reinvested in the business

When would a business usually use a long term sources of finance?

• To cover expansion costs

• To cover running costs

• To improve cash flow

Which of the following is the disadvantage of an overdraft?

• Offers flexibility

• Usually has a high interest rate

• Interest is only paid on the amount used

Which source of finance leads to dilution of ownership?

• Personal savings

• Share capital

• Bank loan

Which of the following sources of finance incur interest?

• share capital

• retained profits

• bank loan

Which of the following is the advantage of crowdfunding to the business?

• Crowdfunding allows people to invest small amounts, potentially increasing the chances of investment

• Investors will need to be offered a return on their investment

• The business idea may not be of interest and so the business may attract little finance