Exam 14: Sources of Financing

The owners of a company change their decision to finance by issuing more shares.Instead,they take out a long-term note with their bank.What will be the repercussions of this change in decision?

A firm's economic potential will directly impact how it is financed.

Which statement best describes trade credit (accounts payable)?

Why might a company choose to increase its debt rather than issue stock?

An IPO is the sale of stock to the general public.

At start-up Karen had to find unique ways to finance her business.She used her credit cards,talked to friends,sold personal assets,and used initial company profits to be re-invested in the business.What is this kind of financing called?

Camilla calls a meeting with the other major stock holders of the company who make up the board of directors.Camilla wants to finance a marketing strategy by securing a long-term note with the company's bank as opposed to selling more shares.What will this do to the financial risk of the company?

One of the 5 Cs of credit a banker considers when making a loan decision is "capability".

Trade credit is offered by banks for a very short-term.

How does the Program for Export Market Development (PEMD)assist Canadian businesses?

A business owner wishes to arrange an asset-based loan with his bank.What accounting information will the bank required for this type of loan?

The choice of financing will affect the company's return on equity.

List two methods of selling common stock,and discuss each method.

Corrina is requesting a loan from her company's bank.She has informed the bank she needs $250,000 to develop an overseas market and feels she will be able to pay the loan back within 5 years.What else with the bank want to know?

What are the 5 Cs of credit that bankers refer to when making a loan decision?

Bill and his wife decided to raise capital for their pet sitting service through crowdfunding.Everyone that contributed received a pet photo frame.What approach to crowdfunding did Bill and his wife use?

A real estate mortgage requires capital such as machinery for collateral.

Love money is a type of private placement.

Partners that own a ski resort are requesting a loan from their bank for $175,000 to upgrade the resort's main chair lift.What information will the bank want to know?

The owner of a new wholesale company knows he will need to use as much cash as possible to market his company and build a sales team.Which loan payment schedule would he prefer?