Chapter 11
Identify a true statement about debit financing.
It is also termed asset-financing
_____ are a specific type of inventory loan that is utilized to finance floor plans of retailers, such as automobile and appliance dealers.
Mortgage receipts
Identify a feature of inventory loans.
Inventory can usually act as the basis of a loan, when the inventory is more liquid and can be easily sold.
Which of the following are categories of equipment financing? (3)
-Sale-leaseback financing -Financing used equipment already owned by the company -Financing the purchasing of the new equipment
Which of the following are conventional bank loans? (3)
-Straight commercial loans -Lines of credit -Character loans
Which of the following bases are evaluated for alternative sources of external funding? (3)
-The length of time the funds are available -The amount of the company control last -The costs involved
Which of the following are key factors involved in factoring the use of the one type of financing over another? (3)
-The prevailing interest rates -The availability of funds -Assets of venture
Identifying a feature of accounts receivable loans used by entrepreneurs.
Accounts receivable act as a good basis for a loan, especially if the customer base is recognized and credit worthy.
Unlike short-term debts, long term debts _____.
Are dependent on the requirement of a collateral.
The financing method that involves an interest bearing instrument, usually a loan, the payment of which is not directly related to the sales and profits of the venture is referred to as _____.
Debt Financing
Commercial banks provide funds in the form of _____.
Debt financing
Obtaining funds for a company in exchange for ownership is referred to as _____.
Equity financing
Identify a true statement about family and friends who act as investors for entrepreneurs
They are most likely to invest because of their relationship with the entrepreneur
______ is referred to as leveraging the firm.
Using debt as a financing instrument
