Finance as a Resource
Within a Business
– Identify the short
term and long term sources of finance where suitable, for each scenario. Give
at least two-three options in each scenario.
– Assess the
implications & costs of each source including the relative advantages and
disadvantages to the business.
– Advice on the appropriate
source of finance for each scenario giving valid justification, why you think
it is the most suitable source in each case.
Scenario 1.
Two friends, Alan
& Tim just graduated from the college. They plan to start their own
business, of selling health foods for office workers. They have identified a
commercial complex as their venue. The Franchise with establishment cost &
working capital for the first six months of operation, would require an
investment of ? 400,000.
Scenario 2.
A transportation company
requires to add two new buses to their fleet of vehicles, with the increasing
demand for transportation for the businesses in the construction industry. This
company is a medium-sized company, with a good reputation in the market for the
services it provides. They had commenced their business since the past four
years. They have been operating efficiently making consistent net profits at
the rate of 15% per annum since they commenced operations. The cost of the
buses amounts to ? 225,000.
