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6. What is a disadvantage of selling assets?

  • Second hand and scrap value is low
  • No one wants second hand stuff
  • Ebay wont sell buildings

7. What is retained profit?

  • Profit that has been saved in a savings account
  • Profits the owners have decided to invest back into the business
  • Profits from another company

8. What is a disadvantage of retained profit?

  • Leaves the company cash flow poor
  • Inexpensive
  • Takes a lot of time to save up

9. Trade cred is taking longer to pay your BLANK which is used to raise finance. What should be in the space of BLANK?

  • Creditors
  • Debtors
  • Bank

10. How does factoring work?

  • Selling off debts to another company
  • Chasing debtors
  • Chasing your boss around the office

11. How is re investing savings different from re investing profit?

  • Ones older than the other
  • Not majorly, it is retained profit from previous years or bank savings from stocks and shares
  • Very different but I don't know how

12. What is an disadvantage of an overdraft?

  • Too much cash is bad for a business
  • High interest rates and difficult to plan ahead
  • Take more money than you actually have

13. What is cash flow?

  • Movement of cash each month in and out of the business
  • Profit and loss
  • Cash put into the business

14. Give a reason for cash flow problems

  • Poor economic conditions
  • Too little stock
  • Demotivated workers

15. Reducing stock improves liquidity by running down stock levels, taking up less space in stock rooms and warehouses and therefore reducing costs

  • True
  • False

16. What are two ways in which a business can improve their cash flow?

  • Selling off stock at sale prices and reducing credit periods
  • Never offering reduced prices
  • Using personal savings

17. What is a advantage of re investing savings?

  • A reliable method of looking after surplus
  • Turn savings into profit
  • Business will look after it better than the business

18. How do preference shares differ to ordinary shares?

  • Not cumulative
  • Do not usually allow you to have voting rights but it is paid at a fixed rate
  • They are weird

19. Short term finance is up to 3 years, long term finance is up to 10 years, how long is classed as medium term finance??

  • 3 to 10 years
  • 7 years
  • 5 years

20. What is an advantage of trade credit?

  • Fast money
  • Not real money
  • Creates problems