Practise finance sources by classifying funding as internal or external and matching short-term or long-term sources to business needs.
Lavender, a Malaysian business, started with bakery, patisserie and takeaway shops. It has now developed into several other businesses. L.café is a self-serve café selling a variety of cakes and drinks. L.bistro is a casual dining place with a selection of Asian foods. L.table is a formal restaurant that uses high quality and organic ingredients.
(Source adapted from: https://www.lavender.com.my/about-us-c1kfx)
Which one of the following would be a source of finance that could be used for a cash flow problem?
Select one answer.
Venture capital
Overdraft
Debenture
Leasing
B
Define the term short-term finance.
AO1-1 mark
Award 1 mark for a correct definition of short-term finance.
Money borrowed that must be paid back within 12 months (1).
(1)
Most people recognise Heinz for the phrase '57 varieties' even though it now produces many more than the original 57 varieties. H J Heinz, the founder of the Heinz business, believed the phrase sounded lucky.
Kraft Heinz is a world-wide producer of food products. It was formed from the merger of Kraft Foods and Heinz in 2015. This created the third largest food and drinks business in the USA and the fifth largest food and drinks business in the world.
Kraft Heinz has over 24 different brands, including Greenseas in Australia and Nutri+Plus in New Zealand. America has the largest number of brands from Maxwell House to Cool Whip. Kraft Heinz produces many different products including tomato sauce, 'Mac\&Cheese', pasta and its famous baked beans that are used and eaten by many people.
Kraft Heinz uses many methods to advertise its products. These include posters, billboards and leaflets in supermarkets.
Which one of the following would be a long-term source of finance for a sole trader?
Select one answer.
Trade credit
Overdraft
Personal savings
Share capital
C
IKEA is a well-known home furniture retailer with stores throughout the world. It was started in 1943 by Ingvar Kamprad when he was given some money by his father for doing well at school. He wanted to produce furniture at a price that people could afford to buy.
He realised that transporting furniture to customers was difficult as goods were often damaged. He developed flat packs to avoid damage. A flat pack contained all the materials needed to self-assemble a table, a chair or a bed.
All IKEA stores are run as franchises.
Which one of the following is an advantage to a business of using venture capital?
Select one answer.
It decreases access to other sources of finance
It keeps ownership in the business
It improves public relations
It can receive expert advice
D