Eco Harvest Technologies Ltd, an agricultural technology company based in New Zealand, has experienced rapid growth since 2023. The company's founders are considering using retained profit to fund further expansion.
Define the term 'retained profit'.
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Quantum Computing Research Ltd, a technology startup in India, secured INR 50 million from a wealthy business angel in December 2023. The investor, a former technology entrepreneur, now owns 25% of QCR and provides business advice.
Define the term 'business angel'.
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African Solar Solutions Ltd, a renewable energy provider in Kenya, requires immediate working capital to fulfil a major government contract. The company is considering various short-term financing options.
State two types of short-term finance available to businesses.
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Nordic Wind Power AB, a Swedish renewable energy company, allows suppliers 90 days of trade credit for turbine components.
State two benefits of offering trade credit to customers.
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South African Mining Corporation needs to replace its vehicle fleet but wants to avoid large capital expenditure. It is considering leasing.
Define the term 'leasing'.
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Malaysian Palm Industries PLC experienced rapid growth in 2023. The company's financial director has recommended maintaining a good relationship with their bank to ensure continued access to their overdraft facility.
State two characteristics of a bank overdraft.
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Finnish Forest Products operates in the paper industry. The company's high gearing ratio has made traditional lenders, such as banks, reluctant to provide additional financing.
State two alternatives to traditional bank lending.
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Yorkshire Tea, a medium-sized family-owned private limited company, needs £5 million to fund a new automated production line. The company has a good credit rating but currently has £8 million in outstanding bank loans.
Explain one way how Yorkshire Tea's existing debt level might affect their choice of finance.
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Coastal Gardens Landscaping is a small business specialising in designing and maintaining bespoke gardens for high-end residential clients. The company has built a strong reputation for quality and attention to detail. Recently, Coastal Gardens secured a large contract to landscape a luxury seaside resort.
To complete this project, the business needs additional capital to purchase specialised equipment and hire temporary staff. Coastal Gardens is considering two financing options: seeking angel investment or applying for government grants for small businesses. Management is focused on ensuring cash flow stability while financing the expansion.
Explain one advantage and one disadvantage of seeking angel investment to finance Coastal Gardens’ project.
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Coastal Gardens Landscaping is a small business specialising in designing and maintaining bespoke gardens for high-end residential clients. The company has built a strong reputation for quality and attention to detail. Recently, Coastal Gardens secured a large contract to landscape a luxury seaside resort.
To complete this project, the business needs additional capital to purchase specialised equipment and hire temporary staff. Coastal Gardens is considering two financing options: seeking angel investment or applying for government grants for small businesses. Management is focused on ensuring cash flow stability while financing the expansion.
Analyse two advantages and one disadvantage of applying for government grants for small businesses to finance Coastal Gardens’ project.
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Summit Sportswear is a medium-sized business specialising in high-performance outdoor clothing. The company is known for its innovative designs and eco-friendly materials. Due to increasing demand, Summit plans to open a new flagship store in a major city, requiring significant capital for renovations, inventory, and staff recruitment.
The management team is considering financing this expansion through trade credit or a long-term bank loan. They are particularly concerned about balancing short-term cash flow with the long-term financial health of the business.
Analyse two advantages and one disadvantage of using a long-term bank loan to finance Summit Sportswear’s expansion.
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Summit Sportswear is a medium-sized business specialising in high-performance outdoor clothing. The company is known for its innovative designs and eco-friendly materials. Due to increasing demand, Summit plans to open a new flagship store in a major city, requiring significant capital for renovations, inventory, and staff recruitment.
The management team is considering financing this expansion through trade credit or a long-term bank loan. They are particularly concerned about balancing short-term cash flow with the long-term financial health of the business.
Describe two factors Summit Sportswear should consider when choosing an appropriate source of finance for its expansion.
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Radiance Fitness is a boutique gym offering high-end fitness classes and personal training sessions. The gym has gained a reputation for its excellent trainers and state-of-the-art equipment, attracting a growing membership base. To accommodate this demand, Radiance Fitness plans to open a new training studio and purchase advanced fitness machines.
The estimated cost of the expansion is £100,000. The management is evaluating two financing options: seeking venture capital investment or using crowdfunding to raise the necessary funds. Radiance Fitness aims to maintain its premium image while ensuring smooth operations during the expansion.
Explain one advantage and one disadvantage of seeking venture capital investment to finance Radiance Fitness’s expansion.
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Radiance Fitness is a boutique gym offering high-end fitness classes and personal training sessions. The gym has gained a reputation for its excellent trainers and state-of-the-art equipment, attracting a growing membership base. To accommodate this demand, Radiance Fitness plans to open a new training studio and purchase advanced fitness machines.
The estimated cost of the expansion is £100,000. The management is evaluating two financing options: seeking venture capital investment or using crowdfunding to raise the necessary funds. Radiance Fitness aims to maintain its premium image while ensuring smooth operations during the expansion.
Describe two factors Radiance Fitness should consider when deciding between venture capital and crowdfunding.
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