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How to Identify the External Financing Needed (EFN)

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

_____ is money borrowed from the bank or investors.

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1. Which of the following is the measure of the maximum amount of ongoing growth achievable without raising financial leverage or the business' debt ratio?

2. Fred's Foods has a net income of $20,000, assets of $150,000, liabilities of $100,000 and equity of $50,000. What is Fred's Foods internal growth rate if he takes 50% of the income for a distribution?

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About This Quiz & Worksheet

This quiz and worksheet serve as perfect assessment tools for gauging your knowledge of what's involved in determining the external financing needed. Use these resources to assess your knowledge of the examples of external financing and determinants of growth. Also, test your decision-making skills when provided with a real-life example.

Quiz & Worksheet Goals

Taking this quiz and worksheet gauge your knowledge of the following:

  • Examples of external financing
  • Achieving growth without external financing
  • The measure of growth without financial leverage
  • Factors that contribute to the determination of growth
  • How to use external financing under specific circumstances

Skills Practiced

This quiz and worksheet can help you practice the following skills:

  • Making connections - use understanding of the concept external financing to better understand ways a company can grow
  • Knowledge application - use your knowledge to address what determines growth within a business
  • Reading comprehension - ensure that you draw the most important information from the related lesson addressing how to identify the external financing needed

Additional Learning

Review the How to Identify the External Financing Needed (EFN) lesson associated with this quiz and worksheet. Upon completion, you will be able to define and describe the following:

  • Capital
  • Internal financing
  • External financing and EFN
  • Internal growth rate (IGR)
  • Sustainable growth rate (SGR)
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