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Sources of Business Finance Test 4

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Sources of Business Finance Test 4
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  • Question 1
    1 / -0
    Funds required for period exceeding 5 years is _______.
    Solution
    The funds that are required for a long period of time are known as long-term financing. These types of financing is required for a period exceeding 5 years.
  • Question 2
    1 / -0
    Short-term financing is most common for financing of ____________.
    Solution
    Every business needs to invest into in current assets. These assets are also known as working capital to facilitate smooth working of day-to-day activities. Short term financing  is raised to cope up with these day-to-day activites to run a business and has to be repaid within a year's time.
  • Question 3
    1 / -0
    Sources of funds for a short duration are ______________.
    Solution
    Sources of funds that provide funds for a duration of less than one year are:
    Trade Credits: These are the credits granted to manufacturers and traders by the suppliers of raw materials.
    Loans from commercial banks: Commercial banks grant short-term finance to business firms which is known as bank credit
    Commercial papers:Commercial paper is a money-market security issued (sold) by large corporations to obtain funds to meet short-term debt obligations  
  • Question 4
    1 / -0
    Medium-term sources of finance include __________.
    Solution
    Medium-term sources of funds are usually for a period of more than one year but not exceeding five years in duration. These finances include, loan from commercial banks or financial institutions, lease financing, public deposits, etc.
  • Question 5
    1 / -0
     The funds required for a period of less than one year are called ___________.
    Solution
    The funds that are borrowed for less than a year's period of time are known as short-term finances. Some of the sources of short term finances are trade credits, bank credits, customer's advances, cash credit, overdrafts, etc.
  • Question 6
    1 / -0
    Internal strategy of a business invariably takes care of ________________.
  • Question 7
    1 / -0
    Long-term sources of finance includes ____________.
    Solution
    The long-term sources fulfil the financial requirements of an enterprise for a period exceeding 5 years and include sources such as shares and debentures, long-term borrowings and loans from financial institutions.
    Such financing is generally required for the acquisition of fixed assets such as equipment, plant, etc.
  • Question 8
    1 / -0
    The funds required for a period of more than one year but less than five years is called ____________.
    Solution
    The classification of sources of funds on the basis of period are related to the duration of time. The medium-term sources of funds are the ones that provide financing for a time period of more than a year and not exceeding five years of time.
  • Question 9
    1 / -0
    Ethics has become the buzzword in the corporate world because of_________.
    Solution
    Ethics has become the buzzword in the corporate world because of both globalization and communications explosion. Globalization refers to the process of integration of world economies into a village economy.
  • Question 10
    1 / -0
    SSI Sector contributes __________ of the Indian Exports.
    Solution
    SSI Sector contributes 45-50% of the Indian Exports. SSI stands for Small Scale Industry. Small scale industries refer to those industries where production process is carried on a small scale or micro scale.
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