A new company was set up two years ago using the personal financial resources of the founders.

CIMA F3 Question Answer

These funds were used to acquire suitable premises.

The company has entered into a long-term lease on the premises which are not yet fully fitted out.

The founders are considering requesting loan finance from the company's bank to fund the purchase of custom-made advanced technology equipment.

No other companies are using this type of equipment.

The company expects to continue to be profitable for the forseeable future.

It re-invests some of its surplus cash in on-going essential research and development.

Which THREE of the following features are likely to be considered negatives by the bank when assessing the company's credit-worthiness?

The equipment is advanced technology custom-made equipment.

The company will continue to remain profitable and to generate net cash.

The company premises are on a long-term lease but are not yet fully fitted out.

The founders invested their personal financial resources in the company.

Essential on-going research and development expenditure is required.

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