Chapter 16 Financing a Business

Indicate whether the source of capital is equity or debt capital: Personal savings invested

Indicate whether the source of capital is equity or debt capital: A mortgage bond for purchase of land

Indicate whether the source of capital is equity or debt capital: Debentures

Indicate whether the source of capital is equity or debt capital: Common stock shares

Indicate whether the source of capital is equity or debt capital: Preferred stock shares

Indicate whether the source of capital is equity or debt capital: A short-term loan

Indicate whether the source of capital is equity or debt capital: A $5,000 line of credit

Ownership that gives holders the first claim on the corporation’s profits and if business fails have priority in assets after creditors have been paid.

Ownership that gives holders the right to share in the corporation’s profits and to participate in managing the business by voting on basic issues

Permits borrowing up to a specified amount for a specified period of time.

Specializes in lending money to businesses based on their accounts receivable.

A long-term written debt instrument sold by a business to investors, promising to pay a definite sum of money at a specified time.

Financing obtained from an investor or investment group that lends large sums of money to promising new or expanding small companies.

If you take a partner into your business, is the partner’s investment known as creditor capital?

Do businesses in financial difficulty often have trouble getting debt capital?