Business finance: needs and sources

To curb inflation, the Government has raised interest rates. Identify and explain two ways that a rise in interest rates could affect FF.

May/June 2016

Identify and explain one reason TT will need short-term finance and one reason TT will need long-term finance.

May/June 2017

Five years ago, Adele set up a dance school. Each year she pays herself a salary and earns $1000 profit. The school provides a range of dance and exercise classes for children. It is operated as a sole trader business. Adele thinks that choosing the correct pricing method matters. She plans to grow the business by opening a second dance school. According to her business plan, she expects this to cost $8000. Adele cannot decide whether a bank loan is the best source of finance for this expansion.

May/June 2018

Identify and explain one benefit and one drawback of leasing all the equipment used in the business. Benefit. Explanation. Drawback. Explanation.

May/June 2018

Explain how FO could use one internal source and one external source of finance during its expansion.

May/June 2021

Explain two business objectives Andrew is likely to set for AAR.

May/June 2021

CPF operates as a clothing retailer and is set up as a private limited company. It runs 4 shops and employs 30 people. The Finance Director is worried about the level of current assets, since working capital matters. Retained profit is also quite low. CPF’s directors are intending to grow the business by launching a new shop. They will need to choose an appropriate source of long-term finance. This expansion plan will have consequences for many of CPF’s stakeholder groups.

May/June 2023

Explain, with an example, one reason why VP may need: • short-term finance • long-term finance.

May/June 2023

APQ is a multinational company. It produces chemicals sold to farmers, helping them raise food output. It intends to build a factory in country X, a developing country with low interest rates. The Finance Director stated: ‘This factory will generate a number of external benefits. APQ is a public limited company that aims to behave ethically towards all of its stakeholders.’ The new factory will cost $100m and APQ will face an opportunity cost. The Finance Director is unsure which source of finance should be chosen for the new factory.

Oct/Nov 2016

Identify and explain one advantage and one disadvantage of GS operating as a partnership.

Oct/Nov 2017

AllPlay is a toy shop that Vince established in 2012. Every year, Vince has achieved his business objectives, including earning a profit in 2017. All of AllPlay’s products are imported. Vince plans to grow the business by opening a second shop so that he can offer a broader product range. The price of purchasing the shop is $20 050. A bank loan is one possible source of finance. Vince’s bank manager will expect to examine AllPlay’s income statement and other financial records.

Oct/Nov 2018

BGR is a private limited company running 6 cinemas in different towns. Clear internal communication matters to BGR. The Finance Director has been studying BGR’s accounts, and an extract is included in Table 4.1. BGR intends to open another cinema and will need to hire 10 new employees. The new cinema will cost $8m. The Finance Director must decide whether BGR should issue new shares or take out a bank loan to finance the expansion.

Oct/Nov 2021

Explain four reasons why quality matters in a business.

Oct/Nov 2022

Explain four factors that a business should take into account when selecting a source of finance for expansion.

Oct/Nov 2023