Business Finance Quiz

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Questions and Answers

Explain the difference between fixed capital and working capital requirements in a business.

Fixed capital is the funds needed for the purchase of fixed assets, while working capital is the requirement for day-to-day operations.

What are the factors that lead to an increase in working capital requirement in a business?

Factors that lead to an increase in working capital requirement include peak season, festival season, expansion of business, shifting to a new location, and payment of current debt.

List three examples of long-term sources of finance that can be used to finance fixed capital requirements.

Examples of long-term sources of finance include issue of shares, issue of debentures, and lease financing.

Explain the concept of retained earnings as a source of finance for a business.

<p>Retained earnings refer to the portion of net profit that is retained in the business and used as an internal source of finance.</p> Signup and view all the answers

What are the sources of finance that can be used to meet working capital requirements through short-term finance?

<p>Sources of finance that can be used to meet working capital requirements through short-term finance include trade credit, factoring, public deposits, commercial paper, commercial banks, and financial institutions.</p> Signup and view all the answers

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