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Exam 12: A Firm S Sources of Financing

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Question 41

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Most startup investors limit their investing to firms that offer potentially high returns within a one to three year period.

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Question 42

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A drawback to "going public" is

A) large profit potential resulting in increased taxation.
B) numerous SEC requirements.
C) national recognition causing increased exposure.
D) additional working capital.

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Question 43

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Assets such as the quality of a firm's employees are considered tangible in nature and thus have substantial value as collateral.

It's been George's "baby" from the beginning and he really doesn't want to be accountable to any outsider for the decisions he makes in his business. In George's case, he should seek initially to secure _____ financing.

Many venture capitalists:

Irwin has applied for a loan from an asset-based lending company.  As security he will offer:

If a Eugenie finances her firm with equity rather than debt, her net income could potentially be greater because

If a firm finances with equity rather than with debt, it will bear no interest expense and thus yield greater net income.

Maguire was considering selling stock as a source of funds but was concerned about:

Chuck, Marie and Tommy are a group of friends who have formed a LLC to raise capital for an investment in 20 franchises of Rigby's , a new sports bar concept. Tommy will be the general partner; Chuck and Marie will be limited partners.  These three are:

Common stock can be sold to underwriters, but they do not guarantee the sale of securities.

Violet's Catering is growing rapidly. A new customer has requested the company cater a retirement luncheon for 500 persons resulting in Violet's Catering needing a large order from the company's primary food vendor.  Although the company is experiencing growth, cash flow is a concern.  What would be the best financing option?

One potential problem with acquiring funds from friends and relatives is that they might feel they have the right to interfere in the management of the business.

The federal government primarily provides funds to small businesses through

State and local governments are becoming less involved in financing new businesses.

Both wholesalers and equipment manufacturers/suppliers can be used as sources of funds.

Even with all his billions and influence, Donald Trump, as an equity investor, cannot demand more than

What key terms should an entrepreneur understand so as to be prepared for loan negotiation?

A company that has over 100 employees with locations in several states is typically the type of company in which business angels make an investment.

In the beginning, some entrepreneurs use ____________ as a source of financing.