UPSA BCPC 203: Sources of Finance - Short Term Overdrafts
10 Questions
1 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Why is it important to take into account the loss of discounts suppliers offer for early payment?

  • To minimize the cost of financing (correct)
  • To understand the impact on cash flow
  • To increase profitability
  • To maintain goodwill with suppliers
  • What is the key difference between operating leases and finance leases?

  • Length of lease agreement
  • Ownership of the asset (correct)
  • Payment structure
  • Asset maintenance responsibilities
  • In a sale and lease back arrangement, what benefit does the company obtain?

  • Immediate cash flow (correct)
  • Long-term ownership of premises
  • Full control over property
  • Reduced rental costs
  • How are short-term loans typically classified?

    <p>Current liabilities</p> Signup and view all the answers

    Which source of finance is considered a temporary solution for immediate cash needs?

    <p>Trade credit</p> Signup and view all the answers

    What is a characteristic of short term overdrafts that distinguishes them from short term loans?

    <p>Flexible withdrawal limits</p> Signup and view all the answers

    How does trade credit impact a company's liquidity position?

    <p>Decreases liquidity due to increased current liabilities</p> Signup and view all the answers

    Why might a company prefer a short-term loan over an overdraft facility?

    <p>Greater flexibility in repayments with loans</p> Signup and view all the answers

    What is a common feature of most short-term financing options?

    <p>Collateral requirements</p> Signup and view all the answers

    How do operating leases contribute to financial leverage for a business?

    <p>By affecting the debt-to-equity ratio positively</p> Signup and view all the answers

    More Like This

    Finance Durations Quiz
    15 questions
    Capital de trabajo y liquidez empresarial
    10 questions
    Short & Medium-Term Sources of Finance
    38 questions
    Use Quizgecko on...
    Browser
    Browser