Sources of Finance
What is the internal source of finance that will use their own money as their main source of finance for their business?
Personal Funds OR Sole Traders
What ratio is this equation for?
Current assets/current liabilities
Current ratios
What is the terminology that represents how many products you have?
Inventory OR stock
Does being profitable confirm positive cash flow? Why or why not?
No, since some companies may find issues with any of the below.
•Rapidly expanding start-ups
•Long supply chains (if they pay suppliers immediately and customers pay within 90 days)
•High unsold inventory, poor pricing, low sales
•Aggressive growth (attempting to expand and facing unexpected costs)
•High expenses
•Seasonal demand
Where is Europe's highest active volcano?
Mount Etna in Sicily, Italy
What impacts retained profit?
•Sales revenue
•Operating expenses
•Cost of goods sold
•Depreciation
What are debtor days?
The average number of days it takes the business to collect its debts.
What are the at least three of the categories that need to be written on your statement of financial positioning?
Noncurrent Asset
Current Asset
Noncurrent Liability
Current Liability
Equity
Date
Business Name
What are four examples of cash inflow and/or outflow?
Outflow – lighting, packaging, salaries, COGS, transport, rent. Inflow – debtors, cash sales, tax refund.
What other grade did I teach at this school?
8th grade
What is one source of finance that would be medium-term?
Acceptable answer:
Bank loan
Leasing
Subsidies
A business has current assets valued at 120,000, stock valued at 30,000, and current liabilities valued at 40,000.
What is their acid test ratio?
120-30=90
90/40=2.25
What is the amount, terminology, and category for the description below.
The business is keeping in their warehouse 500 unsold lawn chairs from last year’s collection. Each chair is valued for the original price of 150 EUR.
75,000 EUR
Inventory
Current Asset
What are 3 ways you can increase cash inflow?
•Effective debt collection
•Cash only
•Increased marketing/promotion
•Expanding product portfolio
•Going public – sell shares
•Overdrafts
•Loans
•Government assistance
•Sales of non-current assets
Who is the most followed retailer on instagram?
Nike with 300mil+
What are external sources of finance?
Definition not examples.
Money that comes from outside of the business. Involves an external stake holder taking a risk and investing in the business.
Student must say one of more of the below:
money from outside the business
external stake holder
taking a risk
outside investments
What is the working capital cycle?
Working capital = CA - CL
Funds available in the business to meet the needs of its day-to-day operations.
Cash-> Creditors-> Stock-> Debtors-> Cash->...
When current liabilities are greater than current assets, the business is unable to pay for its ongoing expenses such as wages, raw materials and suppliers.
What is the total for current assets?
The company has 70 unsold tires in inventory, each valued at 120
The business owns equipment valued at 85,000
The business has 75,000 in their bank account
The company owns the land and buildings valued at 250,000
Inventory (8400) + cash (75000) = 83,400 current assets
opening balance 20
cash inflow 200
tax fund 20
rent 20
lightning 2
salaries 40
Whats the net cash flow and the closing balance?
inflow (220) - outflow (62) = net cash flow (158)
Closing balance = 158+20=178
What number am I thinking about 1 - 20
18
What is the source of finance that pools resources from a group of investors to fund new businesses?
Venture Capital
Net Profit Before Interest and Tax 120,000
Current Assets 95,000
Stock (Inventory) 30,000
Current Liabilities 50,000
Non-Current Liabilities 140,000
Total Assets 320,000
Solve for ROCE, Current Ratio, Acid test Ratio, capital employed
Capital Employed =Total Assets−Current Liabilities 270,000
ROCE =(Net Profit Before Interest and Tax/Capital Employed)×100 44.44%
Current Ratio = Current Assets/Current Liabilities 1.9
Acid Test Ratio = Current Assets−Stock / CL 1.3
Use the following financial information about Ahaan Hotels – a fictional multinational company – to tell me their net assets and their equity
3630 for both
You are the owner of Lets go Rocking, rock climbing company. You started May with $15,000, with a cash inflow of $3,000 and cash outflow of $12,000. Your business currently has high wages, long project timelines, and your customers only pay after project completion.
Answer the following:
Net cash flow = -8000
Closing balance = 7,000
Have the customers pay on a scheduled plan
What is the largest water source in North America?
Niagara Falls