Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

101BF > Lesson 6: Short-Term and Long-Term Funds > Flashcards

Lesson 6: Short-Term and Long-Term Funds Flashcards

1
Q

debt financing is being done through

A

borrowing, whether short term or long term

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

debt financing usually comes with

A

interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Referred to as the cost of borrowing or cost of debt

A

debt financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

bank loans

A

debt financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

issuance of debt instruments

A

debt financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

examples of debt instruments

A

bonds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

financing from nonbank institutions

A

debt financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

examples of nonbank institutions

A

lending companies and cooperatives

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

assignment of accounts receivable

A

debt financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

selling of notes receivables

A

debt financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

common debt financing arrangements

A

bank loans, issuance of debt instruments, financing from nonbank institutions, assignment of accounts receivable, selling of notes receivable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

In the case of banks and other nonbank institutions, borrowing entails

A

compliance of certain requiremnets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

refers to the sale of ownership interest, often represented by shares, to raise fund for business purposes

A

equity financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

equity financing is often represented by

A

shares

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

To compensate for fund usage from equity financing,

A

dividends or profit shares are declared, set aside, and paid by the business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

funds raised by the entrepreneur or business owner from friends and family

A

equity financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

capital infusion

A

equity financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

how is capital fusion done

A

through direct sale of shares or through initial public offerings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

initial public offerings

A

equity financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

financing by private companies

A

equity financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

common equity financing arrangements include

A

funds raised by the entrepreneur/business owner from friends and family, capital infusion through direct sales of shares or through initial public offerings, financing by private companies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

sources of funds

A

bank, credit cooperatives, commercial finance companies, supplier’s credit, bank loans, lending companies, informal lending sources

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

banks are supervised and regulated by the

A

Bangko Sentral ng Pilipinas

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

BSP stands for

A

Bangko Sentral ng Pilipinas

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

An establishment for the deposit, custody, and issuance of money used to facilitate the exchange of money and to make loans and discounts.

A

bank

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

in the philippines, banks include

A

universal and commercial; thrift; rural and cooperative BANKS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Aims to give members access to goods and services that will enhance their income, savings, investments, productivity, and purchasing power.

A

credit cooperatives

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

all cooperatives are regulated and supervised by the

A

Cooperative Development Authority

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

CDA stands for

A

Cooperative Development Authority

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

in coordination with the cda, who prescribe the appropriate prudential rules and regulations applicable to financial service cooperatives.

A

BSP

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Promote and undertake savings and lending services among its members.

A

credit cooperatives

32
Q

Organizations without a bank charter that advances funds to businesses by discounting notes receivable, making loans secured by mortgage, or financing deferred-payment sales of commercial and industrial equipment.

A

commercial finance companies

33
Q

A good relationship has to be

A

nurtured with suppliers

34
Q

Suppliers of raw materials and merchandise are the

A

best short-term working capital

35
Q

Some suppliers charge a small interest rate on their deliveries to their customers

A

if not paid on a specific date

36
Q

suppliers can also ask their customers to

A

sign promissory notes

37
Q

the chances of the suppliers agreeing to the request increase when

A

your company has been a good customer

38
Q

who distribute BANK LOANS and offer short-term credit facilities to SMEs

A

government banks, the development bank of the philippines, land bank of the philippines

39
Q

DBP stands for

A

development bank of the philippines

40
Q

LBP stands or

A

land bank of the philippines

41
Q

Securing loans from these institutions may take some time as they

A

have to do credit investigation and evaluate loanable values of the collateral that may be mortgaged to support a loan

42
Q

the transaction costs involved in bank lending may be

A

high

43
Q

examples of mortgage properties

A

house and lot

44
Q

for bank loans, mortgaged properties may have to

A

be insured as well

45
Q

these companies can finance working capital requirements.

A

lending companies

46
Q

lending companies are faster than

A

bank but they charge higher interests

47
Q

the interests charged by lending companies are higher than

A

banks but lower than informal lending companies or “5-6”

48
Q

informal companies are also known as

A

“5-6”

49
Q

some lending companies require some

A

documents such as purchase order to support a loan application

50
Q

may become the basis of a loan release in lending companies

A

purchase order

51
Q

A very expensive source of financing and should be avoided.

A

informal lending sources

52
Q

in informal lending sources, for every 5 PHP you borrow

A

you have to return 6 PHP

53
Q

how much is the interest rate for just a month in informal lending soruces

A

20% interest

54
Q

loan application requirements

A

demographics; income or revenue; assets and liabilities; contact or references; applicant’s signature; 5C’s of credit

55
Q

includes the name or business name, birthdate, address, SSS no, TIN no, phone no, valid government-issued ID

A

demographics

56
Q

refers to current personal income and employer, employment and salary history, and business revenue, and if there are already an existing business

A

income or revenue

57
Q

applicants may ask to disclose their checking savings and investment accounts and their outstanding loans and credit cards, if there are any.

A

assets and liabilities

58
Q

require identification and contact information of existing employers, previous employers, or even nearest relative not living with the identified contact

A

contact or references

59
Q

stating that everything on the application is true and correct and authorizing the lender to verify the information provided with the identified contacts and references

A

attest and authorization require affixing applicant’s signature on the credit’s application

60
Q

the credit department evaluates on the basis of

A

5C’s of credit

61
Q

5C’s of cerdit

A

character, capacity, capital, collateral, condition

62
Q

loan application process

A

receipt of application form and required documents; verification of information in the application form and required documents (may include interview); checking credit history and writing credit report with appropriate recommendations; documenting final decision

63
Q

if the loan is approved,

A

final documents signoff (interest rate and other terms) and loan release

64
Q

if the loan is rejected

A

rejection letter is sent to applicant

65
Q

Problems faced by SMEs in Financing

A

limited track record; limited acceptable collateral; inadequate financial plans; lack of business plan

66
Q

Creditors of these SMEs cited the following reasons for rejecting the loan applications

A

poor business plans; poor credit history; insufficient sales, income, and cash flows; insufficient collateral; unstable business type

67
Q

Duties of the Borrower to Creditors

A

paying obligations on time; provide collaterals as agreed upon and ensure they are in the physical condition perceived by the creditors; secure permission before declaring cash dividends; notify the credit if the company is acquiring another company or if the company is not the subject of acquisition; do not default on the loans as much as possible; comply with the provisions of the loan covenant such as maintaining certain liquidity and leverage ratios

68
Q

one way of establishing credibility is __________. Coming up with different reasons for not paying on time creates a bad impression.

A

paying obligations on time

69
Q

in the loan negotiation with proper documentation. Ensure that these collaterals are in the physical condition perceived by the creditors during determining the loanable value of the loans

A

provide collaterals as agreed upon

70
Q

Comply with the provisions of the loan covenant such as

A

maintaining certain liquidity and leverage ratios

71
Q

Another provision in the loan covenant involves getting __________________. If the company plans to declare cash dividends, secure permission before declaring so. This is included in most loan covenants because some companies in the past declared cash dividends to the stockholders at the expense of debt services to creditors.

A

permission to declare cash dividends

72
Q

The interest of creditors may be jeopardized if new owners take over the company of if the company is going to acquire another company.

A

notify the creditor if the company is acquiring another company or if the company is not the subject of acquisition

73
Q

Aside from the creditors, there may be other parties, such as the guarantors of the loan who will be put at a disadvantage if the borrower defaults.

A

do not default on the loans as much as possible

74
Q

a person who jointly signs a check, draft or any other negotiable instrument alongside a primary borrower of a loan.

A

co-makers

75
Q

This means that if the primary borrower cannot pay back the loan, they are responsible for paying it back instead. It’s like having a backup person to help pay the loan if needed.

A

co-maker

76
Q

what are the demographics in the loan application

A

name or business name, birthdate, address, SSS no, TIN no, phone no, valid government-issued ID

77
Q

what are the demographics in the loan application

A

name or business name, birthdate, address, SSS no, TIN no, phone no, valid government-issued ID

101BF (12 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions