Sources of Finance

What is the primary need for short-term finance?

• To cover daily operational costs

• To invest in research and development

• To purchase long-term assets

• To pay dividends to shareholders

Which of the following is NOT considered a long-term finance need?

• Investing in office furniture

• Buying property

• Covering daily wages

• Purchasing machinery

What is start-up capital primarily used for?

• Covering daily operational costs

• Paying off debts

• Employee salaries

• Initial resources and expenses

Which of the following is an internal source of finance?

• Crowdfunding

• Personal savings

• Venture capital

• Bank loans

What is retained profit?

• Profit lost in investments

• Profit used for personal expenses

• Profit distributed to shareholders

• Profit reinvested in the business

Which of the following is a short-term source of finance?

• Bank overdrafts

• Debentures

• Share capital

• Mortgages

What is a bank overdraft?

• A type of long-term loan

• Borrowing more than the account balance

• A form of equity financing

• A fixed-rate loan

What is a debenture?

• A fixed-rate loan with no voting rights

• A type of equity financing

• A form of personal savings

• A short-term loan

What does share capital allow limited companies to do?

• Purchase assets outright

• Avoid interest payments

• Pay dividends immediately

• Raise funds through loans

What is a hire purchase agreement?

• A loan for purchasing equipment with installments

• A method of crowdfunding

• A short-term loan for operational costs

• A type of equity investment