Financing Business
Commerce · 50 practice questions
Sources of finance (personal savings, sale of shares/bonds, loans, debentures, mortgage, bank overdraft, ploughing back of profit, credit purchase, leasing); types of capital (share capital, authorized/issued/called-up/paid-up/liquid/working capital, owners' equity); calculation of capital, profits (gross/net) and turnover; problems of sourcing finance; the role of Bureau de Change.
- Identify the various ways of financing a business.
- Discuss the different types of capital.
- Compute forms of capital, profits and turnover.
- Appraise the problems of sourcing finance for business.
- Assess the role of Bureau de Change in an economy.
Try a few questions
- Practice question 1
Nigerian development finance institutions such as the Bank of Industry (BOI) and the Nigerian Export-Import Bank (NEXIM) provide specialized financing mainly to support
- A.Only government ministries
- B.Only the informal sector, with no support for registered businesses
- C.Nigerian industrial development and export-oriented businesses respectively, often on more favourable terms than commercial banks
- D.Only foreign-owned multinational corporations
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C. Nigerian industrial development and export-oriented businesses respectively, often on more favourable terms than commercial banks
BOI and NEXIM provide specialized financing supporting industrial development and export businesses, respectively.
- Practice question 2
'Microfinance banks' primarily provide small-scale financial services, including small loans, to
- A.Only foreign multinational companies
- B.Only government ministries
- C.Small businesses, low-income individuals and micro-entrepreneurs who may lack access to traditional bank finance
- D.Only very large, publicly listed corporations
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C. Small businesses, low-income individuals and micro-entrepreneurs who may lack access to traditional bank finance
Microfinance banks serve small businesses and low-income individuals/entrepreneurs often excluded from traditional banking.
- Practice question 3
Small businesses often face greater difficulty accessing formal bank finance than large companies mainly due to
- A.Complete absence of any need for external finance
- B.Their typically larger available collateral and credit history
- C.Limited collateral, a shorter or less established credit history, and perceived higher lending risk
- D.Guaranteed unlimited access to low-interest credit
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C. Limited collateral, a shorter or less established credit history, and perceived higher lending risk
Small businesses often struggle to access finance due to limited collateral, short credit history and perceived risk.
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