Tag: sources of business finance - 1

Quizzes (4) Questions (55)

Questions Related to sources of business finance - 1

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

Find the correct match of finance organization and their headquarters?

  1. ADB-Manila

  2. RBI-New Delhi

  3. IMF-NewYork

  4. IDA-Geneva
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Asian Development Bank (ADB) has its headquarters in Manila, Philippines. The other options are incorrect: RBI is in Mumbai, IMF is in Washington D.C., and IDA is in Washington D.C.

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

The Principal sources of capital at the earliest stages of the firm ______________.

  1. Equity capital

  2. Short term debts

  3. Long term debts

  4. Both (a) and (b)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Early-stage firms often rely on a mix of equity capital (from founders or investors) and short-term debt (like trade credit or bank loans) to manage initial operations.

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

Operating cycle can be delayed by ________________.

  1. Increase in WIP period

  2. Decrease in raw materials storage period

  3. Decrease in credit payment period

  4. Both (A) and (C) above

  5. Both (B) and (C) above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Operating cycle period = Raw material storage period + Conversion period + Finished goods storage period + average collection period - average payment period.
Increase in WIP (or conversion) period will increase the operating cycle period and this will lead to delay in the operating cycle.

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

The use of borrowings for the purpose of financial advantage for residual stockholders is also called ____________.

  1. Trading on equity

  2. Leverage

  3. Either (a) or (b)

  4. None of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Trading on equity, which is also referred to as financial leverage occurs when a corporation uses bonds, other debt, and prefered stock  to increase its earnings on its common stock.

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

Long-term equity anticipation security is usually classified as ______________.

  1. short-term options

  2. long-term options

  3. short money options

  4. yearly call
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

LEAPS (Long-term Equity Anticipation Securities) are options contracts with expiration dates longer than one year, making them long-term options.

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

Which of the following is a requirement of financing a plan?

  1. Matching financial resources to physical targets

  2. Realisation of Plan target through correct implementation

  3. Raising financial resources to implement the Plan

  4. To make the Plan smaller in size to be met by the available resource.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Financing a plan requires aligning the available financial resources with the physical targets set in the plan to ensure feasibility.

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

Which of the following does not constitute a source of medium term financing?

  1. Issue of equity shares

  2. Issue of preference shares

  3. Term loans from banks

  4. All the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Equity shares represent permanent capital (long-term), not medium-term financing. Preference shares and term loans are standard instruments for medium-term capital.

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

Internal strategy of a business invariably takes care of ________________.

  1. taking care of political environment

  2. media

  3. employees.

  4. both b & c.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Internal strategy focuses on organizational management, which includes managing employees and communicating effectively with the media to maintain brand reputation.

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

Working capital of an enterprise is used for holding current assets such as ________.

  1. Stock of material

  2. Bills receivables

  3. Only A

  4. Both A and B
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Working capital of an enterprise is used for holding current assets such as stock of material and bills receivables. Working capital refers to the capital which are needed to run day-to-day activities.

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

Shelf stock refers to ______________.

  1. Perishable goods

  2. Items that are to be packaged and sold

  3. Items that are stored by the firm and sold with little or no modifications

  4. Accessories which are not part of the standard equipment

  5. Stock which is to be stored for more than one year.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Items that are stored by the firm and sold with little or no modifications are called the shelf stock.