Identify key characteristics of short term financing options for a business.
Identify key characteristics of short term financing options for a business.
Which of the following statements accurately describes short term financing options?
• a.)The amount a business needs to borrow is small compared to a long term loan.
• b.)Short term financing would require a business to pay the money back in up to five years.
• c.)The short term financing options are more difficult to obtain than long term options.
• d.)The short repayment period is less risky for a business as the borrower.
2 — Secured Short Term Financing
Determine types of secured short term financing.
Which of the following items use collateral to obtain short term financing?
• a.)Factoring accounts receivable and Loan secured by inventory
• b.)Trade credit and Loan secured by inventory
• c.)Line of credit and Factoring accounts receivable
• d.)Trade credit and Line of credit
3 — Debt Financing
Recognize options for long term debt financing.
Which of the following describes a bond?
• a.)A specific period when the payout will occur for a bond
• b.)A group that represents the owners of a bond
• c.)A process for taking on a loan and agreeing to pay back the borrowed funds
• d.)An instrument that pays the buyer a set amount plus interest at the end of a defined term
4 — Equity Financing
Identify how companies can use equity for financing.
What does a company keep from making a profit, rather than sharing it with its stockholders?
• a.)Dividends
• b.)Capital gains
• c.)Earnings per share
• d.)Retained earnings
5 — Investors and Private Placement
Differentiate between the alternate forms of financing.
Compared to a venture capitalist, an angel investor is ____________.
• a.)interested in managing business functions
• b.)usually a group of people
• c.)unwilling to take risk
• d.)willing to provide initial funding
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