Understanding Capital Acquisition

What is the process of acquiring capital for a corporation known as?

• Capital raising

• Financial forecasting

• Equity distribution

• Debt management

Which two basic types of financing does a corporation use?

• Crowdfunding and grants

• Retained earnings and stock buybacks

• Equity financing and debt financing

• Venture capital and angel investment

What does equity financing refer to?

• Equity financing is the process of investing in real estate properties.

• Equity financing is the method of raising capital by selling shares of a company.

• Equity financing involves borrowing money from banks.

• Equity financing is a loan that must be repaid with interest.

What is debt financing?

• Debt financing is raising capital by borrowing money that must be repaid with interest.

• Debt financing is acquiring assets without any financial obligation.

• Debt financing is selling equity in a company to raise funds.

• Debt financing is using personal savings to fund a business.

In equity financing, what is an example of obtaining funds?

• Issuing bonds to creditors

• Taking out a bank loan

• Selling shares of stock to investors

• Using retained earnings for expansion

What is a common source of debt financing?

• Government grants

• Bank loans

• Personal savings

• Credit cards

How does equity financing benefit a corporation?

• Equity financing reduces available cash flow.

• Equity financing limits shareholder control.

• Equity financing provides capital without debt, improves cash flow, and supports growth.

• Equity financing increases debt obligations.

What is a disadvantage of debt financing?

• Increased ownership control for shareholders.

• Lower interest rates compared to equity financing.

• No impact on cash flow during repayment periods.

• Increased financial risk due to mandatory interest payments.

What is the primary goal of acquiring capital?

• To reduce business expenses.

• To increase personal wealth.

• To pay off existing debts.

• To fund business operations and growth.

Which type of financing involves selling shares?

• Venture capital

• Debt financing

• Equity financing

• Crowdfunding