Exam 12: A Firm S Sources of Financing

Will has decided to invest $10,000 into his neighbor's new company.  The money will be used in the early stages of development. Will is considered a

List the "5 C's of Credit" and explain their impact on borrowing ability.

A firm with potential for large profits, as opposed to high growth potential, has many more possible sources of financing than does a firm that offers only unattractive returns.

Discuss two methods of selling stock.

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

A small business that needs to purchase real estate could apply for a 7(a) guaranty loan.

Williams Alternative Power, Inc. a company developing solar panels, is applying for a loan.  The research the company has done for the manufacturing process would be a(n) _____ asset for the loan evaluation.

One factor that influences the choice between debt and equity is the

What are the four basic factors that determine how a firm is financed?

Ben left the corporate rat race to start his own business that will allow him to earn a small income while providing plenty of time to pursue his love of pottery making.  He does not expect either growth or high profits.  Ben's prospects for attracting outside financing are:

A source of early-stage capital financing for a company is financing from commercial banks.

Which type of equity-based crowdfunding will, with SEC approval, allow unaccredited investors to invest?

Marla runs a not-for-profit daycare center in her home located in a rural area. She is in need of $10,000 to purchase inventory, supplies and equipment. What Small Business Administration program would be the best fit for Marla's situation and why?

Floyd's income statement showed for the current year his company had an operating income of $45,000 and his balance sheet showed total assets of $300,000.  His return on assets is _________ percent.

Nancy has decided to raise working capital for her upscale boutique business which currently has four locations and is considering franchising the concept in the next few years.  Because of the current company organization and anticipated future plans, the most likely form of financing would be ________.

Small business owners sometimes accept higher levels of debt because doing so permits them to retain all of the stock and full ownership.

When Ben left the corporate rat race to start his own pottery business, he used some of his retirement savings to finance the business.  This practice is known as:

David is trying to decide whether to add capital through investing more of his own money or through borrowing money from the bank.  To help him decide, you remind him that ss long as his firm's rate of return on its assets is greater than the cost of the debt, his rate of return on equity will _____ as the firm uses more debt.

Luke has a new company and is considering equity financing.  Currently, Luke is the only owner and source of equity for the business and makes all executive decisions for daily operations. What effect could the addition of other investors have?

The amount of trade credit available to a new company is dependent on the supplier's confidence in the firm and not the type of business.