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    which source of finance below would best be described as loan capital

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    Specialty

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    12th

    Specialty 11th - 12th 3.1 Source of finance

    Mohd Ismail 651 plays

    20 Qs

    Show Answers See Preview 1. Multiple-choice 30 seconds 1 pt Q.

    Which of the following is the most suitable reason for using personal finance?

    answer choices

    Insufficient internal sources of finance

    Insufficient external sources of finance

    There is no interest obligation

    To please the owners (shareholders) of a company

    2. Multiple-choice 30 seconds 1 pt Q.

    Which of the following is not a feasible source of finance for an ordinary partnership?

    answer choices Secured bank loans Sale and leaseback Debt factoring

    Initial public offering

    3. Multiple-choice 30 seconds 1 pt Q.

    Advantages of internal finance do NOT include

    answer choices

    Greater flexibility in the use of finance

    Greater choice of finance

    No need to go through administrative procedures

    Tax concessions for the use of internal profit

    4. Multiple-choice 30 seconds 1 pt Q.

    Which of the following is the most feasible advantage of using internal funds to purchase a new office building?

    answer choices

    Limited impact on the firm's working capital

    Lower level of gearing

    Dilution of ownership

    Increased value of fixed assets

    5. Multiple-choice 30 seconds 1 pt Q.

    Businesses might choose to use external sources of finance because

    answer choices

    There are no interest charges

    Potential cash flow problems are avoided

    There is insufficient retained profit

    There is an expected rise in interest rates

    6. Multiple-choice 30 seconds 1 pt Q.

    Which of the following is NOT a source of external financing for a public limited company

    answer choices Overdraft Debentures Retained profits Share capital 7. Multiple-choice 30 seconds 1 pt Q.

    Advantages of funding growth through a share issue in all those listed below EXCEPT

    answer choices

    An extra source of finance

    Less financial risks due to the spreading of risks amongst shareholders

    Control of the company is diluted

    It acts as a form of motivation for employees who own shares in the company

    8. Multiple-choice 30 seconds 1 pt Q.

    Which of the following is a drawback to a business that issues debentures

    answer choices

    Lenders do not have any voting rights

    There is dilution of control

    There is a dilution of ownership

    The value of liabilities increases

    9. Multiple-choice 30 seconds 1 pt Q.

    Debenture holders

    answer choices

    own a part of the company in which they hold debentures

    Are paid a return from the profits of the company

    Receive payments from companies before any shareholders

    Are represented as current liabilities on the company's balance sheet

    10. Multiple-choice 30 seconds 1 pt Q.

    Debentures can best be described as a form of

    answer choices

    short-term loan with variable interest rates

    Medium-term loan with variable interest rates

    Long-term loan with a fixed interest rate

    Long term security giving the holder part ownership of the business

    11. Multiple-choice 30 seconds 1 pt Q.

    Which of the following is NOT a clear difference between debenture holders and shareholders of a company

    answer choices

    Voting rights in the company

    ownership of the company

    Interest and dividends as a form of financial return

    Impact on the company's working capital

    12. Multiple-choice 30 seconds 1 pt Q.

    Which of the following is the least likely source of funds for a non-profit organization?

    answer choices Fund-raising events

    Charitable donations

    Brand recognition Sponsorship deals 13. Multiple-choice 30 seconds 1 pt Q.

    Which of the following best describes hire purchase?

    answer choices

    Hiring of equipment for a period of time

    Repaying loans by making fixed regular payments

    Hiring out equipment as a source of finance

    Differs from leasing in that ownership occurs with the last instalment

    14. Multiple-choice 30 seconds 1 pt Q.

    The contract used to raise finance by selling the freehold of an asset and then renting it back immediately on a long-term basis is known as

    answer choices Working capital Sale and leaseback Fixed assets Trade creditors 15. Multiple-choice 30 seconds 1 pt Q.

    Which statement does NOT apply to the use of sale and leaseback?

    answer choices

    The firm can continue to use the asset it has sold and leased back

    The value of fixed as remains unchanged since the firm keeps use of the asset

    The firm can carry on trading as if nothing has happened

    The finance released through the sale improves the firm's liquidity position

    16. Multiple-choice 30 seconds 1 pt Q.

    The debt factoring service that allows the client to be protected against bad debts is known as

    स्रोत : quizizz.com

    3.1 Sources of Finance Flashcards

    Study with Quizlet and memorize flashcards containing terms like which of the following is the most suitable reason for using personal finance? -insufficient internal sources of finance -insufficient external sources of finance -there is not interest obligation -to please the owners (shareholders) of a company, which of the following is not a feasible source of finance for an ordinary partnership? -secured bank loans -sale and leaseback -debt factoring -initial public offering, advantages of internal finance do not include -greater flexibility in the use of finance -greater choice of finance -no need to of through admin procedures -tax concessions for the use of internal profit and more.

    3.1 Sources of Finance

    Term 1 / 20

    which of the following is the most suitable reason for using personal finance?

    -insufficient internal sources of finance

    -insufficient external sources of finance

    -there is not interest obligation

    -to please the owners (shareholders) of a company

    Click the card to flip 👆

    Definition 1 / 20

    there is no interest obligation

    Click the card to flip 👆

    Created by Jayme_Coon

    Terms in this set (20)

    which of the following is the most suitable reason for using personal finance?

    -insufficient internal sources of finance

    -insufficient external sources of finance

    -there is not interest obligation

    -to please the owners (shareholders) of a company

    there is no interest obligation

    which of the following is not a feasible source of finance for an ordinary partnership?

    -secured bank loans -sale and leaseback -debt factoring

    -initial public offering

    initial public offering

    advantages of internal finance do not include

    -greater flexibility in the use of finance

    -greater choice of finance

    -no need to of through admin procedures

    -tax concessions for the use of internal profit

    greater choice of finance

    which of the following is the most feasible advantage of using internal funds to purchase a new office building?

    -limited impact on the firms working capital

    -lower level of gearing

    -dilution of ownership

    -increased value of fixed assets

    lower level of gearing

    businesses might choose to use external sources of finance because

    -there are no interest charges

    -potential cash flow problems are avoided

    -there is insufficient retained profit

    -there is an expected rise in interest rates

    there is insufficient retained profit

    which of the following is not a sources of external financing for a public limited company

    -overdraft -debentures -retained profit -share capital retained profits

    advantages of funding growth through a share issue include all those listed below except

    -an extra source of finance

    -less financial risks due to the spreading of risks amongst shareholders

    -control of the company is diluted

    -it acts as a form of motivation for employees who own shares in the company

    control of the company is diluted

    which of the following is a drawback to a business that uses debentures?

    -lenders do not have any voting rights

    -there is dilution of control

    -there is a dilution of ownership

    -the value of liabilities increases

    the value of liabilities increases

    debenture holders

    -own a part of the company in which they hold debentures

    -are paid a return from the profits of the company

    -receive payments from companies before any shareholders

    -are represented as current liabilities on the company balance sheet

    are represent as current liabilities on the company's balance sheet

    debentures can best be described as a form of

    -short term loan with variable interest rates

    -medium term loan with variable interest rates

    -long term loan with a fixed interest rates

    -long term security giving the holder part ownership of the business

    long term loan with a fixed interest rates

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    Verified questions

    Finance

    On January 1, 2018, Vacation Destinations issues

    40 million of bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:

    40millionofbondsthatpayinterestsemiannuallyonJune30andDecember31.Portionsofthebondamortizationscheduleappearbelow:

    \begin{matrix} \text{(1)} & \text{(2)} & \text{(3)} & \text{(4)} & \text{(5)}\\ \text{ } & \text{Cash Paid} & \text{Interest} & \text{Increase in} & \text{Carrying}\\ \text{Date} & \text{for Interest} & \text{Expense} & \text{Carrying Value} & \text{Value}\\ \hline \text{1/1/2018} & \text{ } & \text{ } & \text{ } & \text{$\$ 37,281,935$}\\ \text{6/30/2018} & \text{$\$ 1,400,000$} & \text{$\$ 1,491,277$} & \text{$\$ 91,277$} & \text{$37,373,212$}\\ \text{12/31/2018} & \text{$1,400,000$} & \text{$1,494,928$} & \text{$94,928$} & \text{$37,468,140$}\\ \end{matrix}

    स्रोत : quizlet.com

    Chapter 7

    Chapter 7 - Sources of finance

    Chapter objectives

    Structure of the chapter

    Sources of funds

    Ordinary (equity) shares

    Loan stock Retained earnings Bank lending Leasing Hire purchase

    Government assistance

    Venture capital Franchising Key terms

    Sourcing money may be done for a variety of reasons. Traditional areas of need may be for capital asset acquirement - new machinery or the construction of a new building or depot. The development of new products can be enormously costly and here again capital may be required. Normally, such developments are financed internally, whereas capital for the acquisition of machinery may come from external sources. In this day and age of tight liquidity, many organisations have to look for short term capital in the way of overdraft or loans in order to provide a cash flow cushion. Interest rates can vary from organisation to organisation and also according to purpose.

    Chapter objectives

    This chapter is intended to provide:

    · An introduction to the different sources of finance available to management, both internal and external

    · An overview of the advantages and disadvantages of the different sources of funds

    · An understanding of the factors governing the choice between different sources of funds.

    Structure of the chapter

    This final chapter starts by looking at the various forms of "shares" as a means to raise new capital and retained earnings as another source. However, whilst these may be "traditional" ways of raising funds, they are by no means the only ones. There are many more sources available to companies who do not wish to become "public" by means of share issues. These alternatives include bank borrowing, government assistance, venture capital and franchising. All have their own advantages and disadvantages and degrees of risk attached.

    Sources of funds

    A company might raise new funds from the following sources:

    · The capital markets:

    i) new share issues, for example, by companies acquiring a stock market listing for the first time

    ii) rights issues · Loan stock · Retained earnings · Bank borrowing

    · Government sources

    · Business expansion scheme funds

    · Venture capital · Franchising.

    Ordinary (equity) shares

    Ordinary shares are issued to the owners of a company. They have a nominal or 'face' value, typically of $1 or 50 cents. The market value of a quoted company's shares bears no relationship to their nominal value, except that when ordinary shares are issued for cash, the issue price must be equal to or be more than the nominal value of the shares.

    Deferred ordinary shares

    are a form of ordinary shares, which are entitled to a dividend only after a certain date or if profits rise above a certain amount. Voting rights might also differ from those attached to other ordinary shares.

    Ordinary shareholders put funds into their company:

    a) by paying for a new issue of shares

    b) through retained profits.

    Simply retaining profits, instead of paying them out in the form of dividends, offers an important, simple low-cost source of finance, although this method may not provide enough funds, for example, if the firm is seeking to grow.

    A new issue of shares might be made in a variety of different circumstances:

    a) The company might want to raise more cash. If it issues ordinary shares for cash, should the shares be issued pro rata to existing shareholders, so that control or ownership of the company is not affected? If, for example, a company with 200,000 ordinary shares in issue decides to issue 50,000 new shares to raise cash, should it offer the new shares to existing shareholders, or should it sell them to new shareholders instead?

    i) If a company sells the new shares to existing shareholders in proportion to their existing shareholding in the company, we have a In the example above, the 50,000 shares would be issued as a one-in-four rights issue, by offering shareholders one new share for every four shares they currently hold.

    ii) If the number of new shares being issued is small compared to the number of shares already in issue, it might be decided instead to sell them to new shareholders, since ownership of the company would only be minimally affected.

    b) The company might want to issue shares partly to raise cash, but more importantly to float' its shares on a stick exchange.

    c) The company might issue new shares to the shareholders of another company, in order to take it over.

    New shares issues

    A company seeking to obtain additional equity funds may be:

    a) an unquoted company wishing to obtain a Stock Exchange quotation

    b) an unquoted company wishing to issue new shares, but without obtaining a Stock Exchange quotation

    c) a company which is already listed on the Stock Exchange wishing to issue additional new shares.

    The methods by which an unquoted company can obtain a quotation on the stock market are:

    a) an offer for sale

    b) a prospectus issue

    c) a placing d) an introduction. Offers for sale:

    An offer for sale is a means of selling the shares of a company to the public.

    a) An unquoted company may issue shares, and then sell them on the Stock Exchange, to raise cash for the company. All the shares in the company, not just the new ones, would then become marketable.

    स्रोत : www.fao.org

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