TB p. 83--Raising Finance exercises A&B

Customers not paying on time often leads to ___________ problems

• equity

• cashflow

• asset

Answer explanation

Cash flow is the net cash and cash equivalents transferred in and out of a company. IF people don't pay their debts the company doesn't have cash for other things.

Our state-of-the art machinery is our major ________.

• possession

• asset

• equity

Answer explanation

An asset is a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit.

The______ rate on the loan was 12%.

• fee

• charge

• interest

Answer explanation

interest is the price you pay to borrow money

They could not pay their debts and faced ___________.

• bankruptcy

• warranty

• overpayment

Answer explanation

completely lacking in money

Sorbat has gone into ______ with debts of about $20 million.

• indemnity

• investment

• administration

Answer explanation

indemnity is a type of insurance compensation paid for loss or damages.

The finance a company raises from issuing shares rather than taking out loans is known as ________ capital.

• equity

• dividend

• stock

Answer explanation

equity capital is something that a company owns that is not tied to debt. This type of capital often involves investor money entering the company in exchange for shares.

The _________ is the original amount of a loan not including any interest charged

• instalment

• principal

• subsidy

Answer explanation

The principal refers to the borrowed initial sum. So, if you were to take out a start-up loan for $75,000 and pay off $25,000, you would have $50,000 of the principal left to repay. You would also still need to pay off any interest that you owe on the borrowed money.

A/An ________ is a particular type of loan for the purchase of property.

• credit

• overdraft

• mortgage

Answer explanation

an agreement between you and a lender that gives the lender the right to take your property if you fail to repay the money you've borrowed plus interest.

If a company defaults on a loan, it means they miss a/an _____.

• budget

• instalment

• collateral

Answer explanation

a sum of money due as one of several equal payments for something, spread over an agreed period of time.

Money lent to a start-up businesses is known as risk or _____ capital

• share

• working

• venture

Answer explanation

Venture capital is a form of private financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential.