To answer question no. 16 to 20, READ following case Case # 04:- After completing master degree you start consultancy to provide guidance to new ventures. While in discussion with Mr. Shazad (a new business man) he asked about sources of capital, the factors affecting type of financing and federal agencies participating in small business innovation research program such as department of defense, department of energy, education and department of commerce. You told him the government grant procedure of three phases. Before consulting you Mr. Shazad was unaware of three types of funding such as early stage financing, development finances & acquisition financing. One of your assistant briefed him about venture-capital process that can be broken down into four primary stages: Stage I: deals with Preliminary screening Initial evaluation of the deal. Stage II deals with agreement on principal terms - Between entrepreneur and venture capitalist. Similarly stage III: deals in Due diligence - Stage of deal evaluation. Last Stage IV deals with the Final approval - Document showing the final terms of the deal. In detail discussion with you he came to know the factors in Valuation such as Nature and history of business, Economic outlook- general and industry, Comparative data and Book (net) value etc. The owner of newly incorporated business was informed that some part of the company by registering with the Securities and Exchange Commission (SEC) can be sold to generate financial resources. First public offering requires six to eight weeks. The SEC takes six to 12 weeks to declare the registration effective. The entrepreneur should have an up-to-date assessment of the cash position. A daily cash sheet would provide an effective indication of any daily shortfall and of problems or errors that might have occurred. Compare budgeted or expected cash flows with actual cash flows. Managing Costs and Profits Compute net income for interim periods during the year. Assess each item to determine cost reduction. Consider raising prices to ensure positive profits. Compare current actual costs with prior incurred costs. Allocate expenses as effectively as possible, by product. Avoid arbitrary cost allocation Question No. 16: What is the difference between debt financing and equity financing? Question No. 17: Write down the Factors affecting type of financing Question No. 18: Write down the internally & externally generated funds. Question No. 19: Write down the government grant procedure. Question No. 20: What is purpose of cashflow statement