1.

TOPIC: DEBT EQUITY REPORTERS: MABIDA, MAHILUM,

MAYAGMA, MANGILAYA

ASSESSMENT
2. TOPIC: BUSINESS PROPOSAL REPORTERS: TIBON, TORRES,
TRADIO, VISDA, TORREMOCHA

3. TOPIC: SOURCE OF FUNDS REPORTERS: OLIAMOT, PEPITO,

CLYDE., PEPITO, CARL, PILAPIL

1. TOPIC: DEBT EQUITY

*What is the formula for debt equity ratio?
Ans: A.
*What number indicates a low risk debt equity ratio?
Ans: A.
*What is financial leverage?
Ans: C.

ESSAY:
Debt to equity ratio is the financial liquidity ratio that compares firms total debt vs
total equity. It is calculated by dividing total debt by total equity which indicates
how leveraged the firm is.

Higher ratio indicates that a firm is highly leveraged and major financing is done
by creditors and investors and is a riskier investment proposition whereas as
lower ratio indicates the firm major financing is done by its shareholders/ own
resources and is a less riskier investment proposition.
While comparing different investment alternatives, investors will most likely
prefer the firms with lower debt to equity ratio because it will indicate that the
firm has enough resources to pay off its debt and is less risky. But on the flip
side, lower debt equity ratio will also indicate the firm is not able to take the
advantage of increased profits that financing leverage would/ may bring.

BALANCE SHEET
COMPANY Q
Answer: To get the assets we need to add the total liabilities (98,250) and the total shareholder equity
(150,250) the equal is 248,500(assets).

Asset: 348,500 – Liabilities: 98,250 = (shareholders) 150, 250 its d/e ratio therefore be 98,250 divided
by 150,250 (d/e ratio) = 0.65.

2. BUSINESS PROPOSAL
● How to write a business proposal
ANSWER: 1. TITLE PAGE
2.TABLE OF CONTENTS
3. EXECUTIVE SUMMARY
4. MAIN BODY
5. ADDITIONAL CLAUSES
6. PRICING AND BILLING
7. TERMS AND CONDITIONS
8. ACCEPTANCE PAGE

3. TOPIC: SOURCE OF FUNDS

1. WHAT IS THE SOURCE OF FUNDS?

ans: refers to the origin of money or assets that are used in a
specific transaction or business relationship. In establishing
the source of funds, firms must seek to understand not only
where funds came from (in terms of the account from which
they were transferred) but the activity that was involved in
generating those funds – for example, a source of
employment, the sale of a house, or an inheritance.
2. In your own opinion, what is the difference between Internal sources and External sources?
ans: While internal sources of finance are economical, external sources of finance are
expensive. Internal sources of finance do not require collateral, for raising funds. Conversely, assets
are sometimes mortgaged as security, so as to raise funds from external sources.
3. How important is the source of funds when starting a business?
ans: An entrepreneur can perform a lot of business model development without funding; but
when it comes to building the company, funding is necessary. Startup funding pays for incorporation,
business licenses, insurance, facilities, equipment, marketing collateral and the hiring of necessary
talent.
4. Give at least 3 examples of internal sources and external sources. Define each.
ans:
INTERNAL SOURCES
*owner’s capital - Owner’s Capital, also called owner’s equity, is the equity account that
shows the owners’ stake in the business. In other words, this account shows how much of
the company assets are owned by the owners instead of creditors.
*retained profits - Retained profit is money that your business has earned after you’ve taken
costs and other payments into account. It’s money you can put back into your business, or
use to pay off business debts. What is business insurance? For the retained profit meaning,
it’s the profit a business makes that doesn’t need to be paid out as dividends.
*assets sale- An asset sale occurs when a bank or other type of firm sells its receivables to
another party. A type of non-recourse sale, these transactions are executed for a variety of
reasons, including to mitigate asset-related risk, obtain free-cash flows, or meet liquidation
requirements.
EXTERNAL SOURCES
*Venture capital -Venture capital (VC) is a form of private equity and a type of financing that
investors provide to startup companies and small businesses that are believed to have long-
term growth potential. Venture capital generally comes from well-off investors, investment
banks, and any other financial institutions.
*bank overdraft - bank overdraft is a type of financial instrument that is provided to some
customers by the bank in the form of an extended credit facility, which comes into effect
once the main balance of the account reaches zero.
*trade credit -Trade credit is a business-to-business (B2B) agreement in which a customer
can purchase goods without paying cash up front, and paying the supplier at a later
scheduled date. Usually, businesses that operate with trade credits will give buyers 30, 60, or
90 days to pay, with the transaction recorded through an invoice.