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EXERCISE 3: FINANCIAL NEEDS AND FINANCING REQUIREMENTS A company needs $1.2 million to invest in different types of assets and operating expenses to launch a

  1. EXERCISE 3: FINANCIAL NEEDS AND FINANCING REQUIREMENTS

    A company needs $1.2 million to invest in different types of assets and operating expenses to launch a new line of products. With the following information, make a list of the companys financial needs and financing requirements.

    Marketing costs

    $55,000

    Trade receivables

    $175,000

    Depreciation

    50,000

    Equipment

    500,000

    Shareholders

    200,000

    Suppliers

    250,000

    Inventories

    350,000

    Profit for the year

    100,000

    Working capital loan

    100,000

    Equipment vendors

    200,000

    Research and development

    120,000

    Commercial bank

    300,000

  2. Differentiate between internal and external financing. Give several examples.

3. Discuss the concepts of business risk, financial risk, and instrument risk.

4. Identify the six Cs of credit.

5. How can government agencies help businesses?

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