IB BM 3.1 Sources of Finance

Leasing is similar to hire purchasing except that:

An advantage of using debentures vs. selling shares is:

Bonds issued by a company with a fixed rate of interest are called:

These specialist organizations invest in smaller companies and tend to be less risk averse than banks.

Investing unused cash can be another internal source of finance by:

The finance spend on purchasing fixed assets and other large priced items is called:

A form of internal finance is selling company assets.

Using retained earnings can cause conflict with which stakeholder?

Selling accounts receivable to a business to receive a percentage of the value today is called:

Businesses may sell fixed assets because:

The terms of trade credit are usually between:

External sources of finance ____________________________.

This external source of finance is the most flexible.

Payments for the daily running of a business are considered:

Fixed assets are ____________________________.

External sources of finance will involve a financial reward to the providers such as interest.

Fixed assets can be used as _____________ to secure a loan.

Retained profits are also known as ploughed back or internal profits.

Businesses need finance for:

A disadvantage of debentures would be:

When choosing a source a finance a business must consider:

Trade credit is a source of finance because the business is delaying payment.

The main source of finance for sole traders and partnerships are:

These are financial benefits given by government to a business to reduce costs and encourage increased production.

Higher risk businesses will have to pay a higher cost of capital from lenders.

Making monthly payments to pay for a fixed asset over 12-24 months is called:

A company or individual who owes the business money is called a(n):

Money from government or other agencies to help finance businesses do not need to be paid back.

Medium term financing is:

Internal sources of finance are useful to businesses for all reasons except:

Individual investors who put in their own money to support small start-up businesses and in-turn receive a better return

Selling assets is another form of external sources of finance.

An advantage of using retained profits is:

Using retained profits will incur interest charges.

Equity financing is when ___________________ issue shares.

Unincorporated businesses have unlimited liability which means:

This is a medium term source of finance:

A debt factor makes money by not paying the business the full value of invoices (80-85%). 

Hire purchase and leasing saves a business money by avoiding large costs up front.

Buy now, pay later is this form of external financing.