GCSE Finance Test
Year 10 Business Studies
1. There are a number of sources of finance available to a
business. These can be classed as either internal or external
sources.
(a) From the list below put a tick in the box next to each one
that is an
external source.
 Bank loan
 Retained profits
 Sale of assets
 Sale of shares
 Venture Capital
[3]
Banks will not lend large sums of money to a business unless it
can provide security.
(b)(i) State the meaning of the term ‘security’.
[1]
(ii) State an example of an item a business could use as
security for a bank loan.
[1]
(c) State two reasons why a bank would insist on security
before granting a loan.
Reason 1
[1]
Reason 2
[1]
Please turn over
ScreenScene plc needs to raise £200 million to modernise
existing cinemas and to fund the building of new facilities.
Finance options available are:
 Share issue
 Trade Credit
 Sale and lease back
 Bank Loan
 Overdraft
(d)(i) From the list above choose two methods that are most
suitable.
Method 1
[1]
Method 2
[1]
(ii) Which is the better option of the two methods?
[1]
(iii) Give two reasons for your choice.
Reason 1
[1]
Reason 2
[1]
Look at the Cash Flow Forecast January 2009 - April 2009
for ScreenScene plc Ellesmere Park Multiplex.
(e)(i) In the Cash Flow Forecast the cost of insurance, payable
in April, has been left out. This costs £1000. Enter this in a
suitable box in the Cash Flow Forecast.
[1]
(ii) Enter the values missing from the three grey boxes.
[3]
(f) At the end of which month does ScreenScene plc first
appear to have a cash flow problem?
[1]
(g) Suggest the most appropriate source of finance to deal
with this cash flow problem.
[1]
(h) State two reasons why businesses may suffer from cash
flow problems.
Reason 1
[1]
Reason 2
[1]