Lesson 1 – Sources of Finance
STARTER
You are looking to buy a new Xbox/Playstation but cannot afford to buy it yet. List 5 ways you could
try to get enough money to pay for it.
1.
2.
3.
4.
5.
TASK 1
Write down as many reasons as you can think of as to why a business might need additional finance.
1.
2.
3.
4.
PRACTICE QUESTIONS
Amal has a sole trader business called IceCold selling ice cream in the UK. During the winter he does
not make many sales on ice cream but during June, July, and August it is very popular. Amal must
make sure that he saves enough of his earnings from the summer to pay his expenses for the rest of
the year. In April and May he starts preparing large quantities of ice cream ready for the busy
summer ahead. He must purchase large quantities of ingredients from suppliers in April but after a
quiet couple of months he does not have much cash in the bank. Amal is considering securing a bank
overdraft, but his suppliers have offered him trade credit.
1. Define the term trade credit (1)
2. Analyse the benefits to Amal of using a bank overdraft to fund production for the summer
months (6)