Factors influencing the choice of finance:

    Cards (51)

    • Selling assets is an internal source of finance.

      True
    • Match the source of finance with its description:
      Retained profits ↔️ Earnings saved from past profits
      Sale of assets ↔️ Selling unneeded assets
      Loans ↔️ Borrowing from financial institutions
      Crowdfunding ↔️ Raising funds online
    • What is a key advantage of loans as a source of finance?
      Flexible repayment terms
    • What is the effect of lower interest rates on loan attractiveness?
      Makes loans more attractive
    • Aligning finance with business needs can improve financial stability and growth potential
    • Choosing the right source of finance is vital for achieving business objectives.

      True
    • A tech start-up may seek venture capital to cover start-up costs and hire experts.

      True
    • Selling unused assets is an example of an internal source of finance.
      True
    • Crowdfunding involves raising funds from a large number of people online.

      True
    • What are three factors that influence a business's choice of finance?
      Size, amount needed, risk
    • Order the factors influencing finance selection from most general to most specific:
      1️⃣ Size of the business
      2️⃣ Amount needed
      3️⃣ Length of time required
      4️⃣ Interest rates
      5️⃣ Risk
    • A tech start-up might attract venture capital to scale
    • Aligning finance with business needs improves financial stability
    • Bank loans have moderate interest rates and require collateral
    • What are legal and regulatory restrictions affecting finance?
      Securities laws, lending regulations
    • Corporate tax laws indirectly affect retained profits available for reinvestment.
      True
    • Aligning finance with risk tolerance supports the long-term goals of the organization.

      True
    • Retained profits are an example of an internal
    • Money borrowed from banks is categorized as a loan
    • Loans require collateral and interest, making them less suitable for high-risk ventures
    • Smaller business needs can often be met by retained profits or overdrafts
    • What type of financing is typically used for capital needs in a business?
      Loans, venture capital
    • Aligning finance with business needs can improve financial stability and growth potential
    • Loans, venture capital, and retained profits are typical financing options for capital
    • Retained profits are earnings saved up from past profits
    • Venture capital firms specialize in funding start-ups
    • Venture capital dilutes ownership and requires strong growth potential
    • Lower interest rates make loans more attractive
    • What type of projects is venture capital willing to invest in?
      High-risk projects
    • What are typical financing options for capital needs?
      Loans, venture capital, retained profits
    • What does the cost of finance include?
      Interest rates, fees, equity dilution
    • A new restaurant might prefer a bank loan due to its lower initial cost.

      True
    • What can crowdfunding regulations affect?
      Types of campaigns allowed
    • Entrepreneurs with low risk tolerance may prefer loans to maintain full ownership
    • What are the two main categories of sources of finance?
      Internal and external
    • What is one advantage of crowdfunding as a source of finance?
      Builds customer engagement
    • What is a disadvantage of retained profits as a source of finance?
      May delay dividends
    • Retained profits do not require interest payments.

      True
    • Higher-risk ventures often seek loans rather than venture capital.
      False
    • Choosing the right source of finance is vital for the success of the business.

      True
    See similar decks