Exam 12: A Firms Sources of Financing

Match the term with its definition. a.Asset-based loan b.Basis point c.Chattel mortgage d.Equipment loan e.JIBAR (Johannesburg Inter-Bank Agreed Rate) f.Line of credit g.Prime rate h.Purchase-order financing i.Term loan -Money loaned for a 5-to 10-year term, corresponding to the length of time the investment will bring in profits.

Gary has applied for a loan to expand his young business.When bankers look for evidence of whether he will be able to repay a loan, they usually base their assessment on:

Frankie is looking for sources of financing for his new tour company.At this time, he would like to keep his financing close to home but eventually apply for bank financing.What are Frankie's financial support options?

Sarie loves to cook and go backpacking, and she had an idea for a backpacking cookbook that would combine ultra-light ingredients into interesting and appetising meals.However, she needs the money to research and test the recipes as well as for cover printing and marketing expenses.How could Sarie use the different crowdfunding options, donations, rewards' options and pre-purchase or equity-based options to finance her cookbook?

Even with all his billions and influence, Donald Trump, as an equity investor, cannot demand more than:

Borrowing money rather than issuing shares typically increases the potential for higher rates of return to owners.

The five Cs of credit are character, capacity, capital, conditions and collateral.

Generally, as long as a business's operating income return on its assets is greater than the cost of debt, the owners' return on equity investment will decrease as the business uses more debt.

It's been George's 'baby' from the beginning and he really doesn't want to be accountable to any outsider for the decisions he makes in his business.In George's case, he should seek initially to secure _____ financing.

If Tshegofatso is applying for a loan for a shelving system to improve her retail sales where the system will serve as collateral, what type of loan would be the most appropriate?

Violet's Catering is growing rapidly.A new customer has requested the company cater a retirement luncheon for 500 persons resulting in Violet's Catering needing a large order from the company's primary food vendor.Although the company is experiencing growth, cash flow is a concern.What would be the best financing option?

To determine how well her business is doing, Asanda should monitor the return on her investment (equity) because it is a better measure of performance than:

If he holds true to the average, Donald Trump is likely to invest approximately _____ of his investment in later-stage businesses.

Demitrius runs a Greek restaurant and is currently considering leasing or purchasing some updated equipment.What statement is correct?

Eric has decided to invest R10 000 into his neighbour's new company.The money will be used in the early stages of development.Eric is considered a:

The type of financing Karabo received from a business angel is known as:

Discuss reasons a business would lease as opposed to purchasing equipment.

Johan was considering selling shares as a source of funds but was concerned about:

Elsie wants to calculate her return on equity but has forgotten the formula.You tell her that return on equity equals

Renata has asked her family members to help her launch her new business.She must consider that: