Financing a Business Enterprise Quiz
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Questions and Answers

What is the key challenge faced by managers when financing a business enterprise?

  • Choosing the most expensive source of finance
  • Relying solely on internal sources of finance
  • Selecting the longest-term financial source
  • Selecting the right source and mix of finance (correct)
  • How is ownership and control classified in sources of finance?

  • Based on the business sector
  • By transaction amount
  • By geographical location
  • Into owned and borrowed capital (correct)
  • What is the time period classification of sources of financing based on?

  • Types of products financed
  • Duration of the financing provided (correct)
  • Land ownership
  • Geographical span
  • Which term is used for financing that occurs between 1 and 3 years?

    <p>Medium-term financing</p> Signup and view all the answers

    Why is it essential for managers to understand the characteristics of financial sources?

    <p>To analyse and compare resources effectively</p> Signup and view all the answers

    What is the purpose of retaining earnings in a company?

    <p>To reinvest in growth opportunities</p> Signup and view all the answers

    Why is asset redeployment considered important for a company?

    <p>To increase efficiency and profitability</p> Signup and view all the answers

    How does depreciation impact a company's financials?

    <p>It decreases the amount of reported earnings and increases free cash flow</p> Signup and view all the answers

    What is the characteristic of accrued liabilities as a source of financing?

    <p>Periodic and interest-free financing source</p> Signup and view all the answers

    In what areas can companies typically reinvest their retained earnings?

    <p>Growing research and development capabilities</p> Signup and view all the answers

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