Which of the following is a short-term source of finance?
Bank loan
Overdraft
Venture capital
Which of these is the correct definition of trade credit?
Trade credit is where a business can spend more money than it has in its bank account
Trade credit is money the business owners have invested through their own savings
Trade credit is an agreement with a supplier to pay bills at a later date
Which of these is a long-term source of finance?
Share capital
Trade credit
Which list identifies only long-term sources of finance?
Personal savings, loans and crowd funding
Overdrafts, retained profit and crowd funding
Trade credit, venture capital and share capital
What is the meaning of retained profit?
Profit paid to shareholders
Profit made by the business
Profit reinvested in the business
When would a business usually use a long-term source of finance?
To cover expansion costs
To cover running costs
To improve cash flow
Which of the following is a disadvantage of an overdraft?
Offers flexibility
Usually has a high interest rate
Interest is only paid on the amount used
Which source of finance leads to a dilution of ownership?
Personal savings
Which of the following sources of finance incurs interest?
Retained profit
Which of these is an advantage of crowdfunding to the business?
Crowdfunding allows people to invest small amounts, potentially increasing the chances of investment
Investors will need to be offered a return on their investment
The business idea may not be of interest and so the business may attract little finance