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Forms of finance - short answer questions


Question 1

Explain the concept of sale and leaseback.

Question 2

Outline the reasons for a company raising capital from a variety of sources.

Question 3

Explain the difference between an ordinary share and a debenture.

Question 4

Explain why venture capital may be a deceptively dangerous source of finance.

Question 5

The capital that a firm needs may be raised from within the company (internally) or from outside of the firm (externally).

Look at the following list of possible sources of funds and decide if they are an internal (I) or external (E) sources. Be careful, some are not sources at all, but are uses of funds (U). Mark these as well.

1. Profits [I] or [E] or [U]
2. Overdrafts [I] or [E] or [U]
3. Bank loans [I] or [E] or [U]
4. Trade creditors [I] or [E] or [U]
5. Selling of unwanted assets [I] or [E] or [U]
6. Hire purchase [I] or [E] or [U]
7. Credit sales [I] or [E] or [U]
8. Taxation [I] or [E] or [U]
9. Debt factoring [I] or [E] or [U]
10. Sale of more shares to existing shareholders [I] or [E] or [U]
11. Dividends [I] or [E] or [U]