Discussion Questions FIN571, business and finance homework help

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Business Finance

Description

Please make answers at least 150 words and use scholarly references and cite in apa format.

Question 1:

Explain what is meant by bootstrapping when raising seed financing and why bootstrapping is important. Describe the role of venture capitalists in the economy and discuss how they reduce their risk when investing in start-up businesses. Find (via the Internet) and discuss a company that used angel funding or venture capital.

Question 2:

Optical Supply Company offers credit terms of 2/10, net 60. If Optical Supply is considering a change in its credit terms to one of those indicated below, explain whether each change would increase or decrease sales.

  • 2/10, net 30; (b) net 60; (c) 3/15, net 60; (d) 2/10, net 30, 30 extra.

Question 3:

Identify the three elements which make up the terms of sale.

Question 4:

What factors influence when credit should be granted and the length of the credit period offered to customers?

Question 5:

Explain the ABC and Economic Order Quantity Model in inventory management.

Question 6:

Describe the uses and sources of cash.

Question 7:

Describe the uses and sources of cash.

Question 8:

Describe the characteristics of the operating cycle and the cash cycle.

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Explanation & Answer

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Running head: PRINCIPLES OF FINANCE

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Principles of Finance
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PRINCIPLES OF FINANCE

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Bootstrapping
Bootstrapping is the essence of minimizing the use of resources to channel it into the initial
capital of a startup company. When initiating a business venture, many entrepreneurs find it
difficult to acquire funding. They, therefore, resort to other credit method and engaging in selfdestructive partnerships that eventually cost the business more. However, bootstrapping has
proven a perfect way of using the limited resources available to get the business running, even if
it means doing so at the expense of the comfort of the proprietors.
This method is important as it stretches the entrepreneurs to tap into talents that they may
not have realized they possess. Due to the hardships that come with bootstrapping, they are forced
to improvise and innovate so that they use the least amounts of money possible. This way, they
develop their competencies of running the venture. Further, the model allows start-up investors to
have full control of their businesses. They decide to focus on growing their ideas within the
boundaries of their budgets as opposed to entering partnerships or credit ventures that tend to affect
their control of the company equity (Fatoki, 2014).
Finally, the idea of bootstrapping attracts valuable talent to the organization. The idea does
not allow the business to hire experienced and expensive talent as it cannot afford it. However, a
skilled professional who is willing to invest in himself and grow alongside the company blends
well with this model. In the end, the venture ends up with partners with the right intentions.
Ve...


Anonymous
Excellent resource! Really helped me get the gist of things.

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