Explain the importance of financial planning and discuss why it is important to the success of Green Supplies Ltd.

Task 1
(LO1: Understand the sources of finance available to a business)
Scenario:
You work as a finance manager within the Head Offices of Green Supplies Ltd.
You have been asked to assist the management team in preparing and forecasting the
company’s expansion. Green Supplies Ltd is a small private company who began trading in
April 2013. The company supplies fitness products online to the public; specializing in mid range
sporting goods and equipment. In 2014, it wishes to increase its activity in the market
and as such need to identify a variety of options for finance.
Your research has shown that the Celtic Group would be interested in investing in Green
Supplies Ltd. This could be an option for the company and will be something for you to
consider, however, in the event that this investment is not viable, other options of finance
must be explored. The Celtic Group has been keen to enter into a deal of this nature as
market research indicates that internet related businesses are expected to grow in the UK and
globally.
Your line manager has asked you to explore the cost and profit implications of various
sources of finance that would be available to Green Supplies Ltd. In particular, the executives
within the group want to know what the costs would be if the group was to accept the
investment offer from the Celtic Group.
Requirements:
Task1:
(a) Identify different sources of finance available to Green Supplies Ltd. This should include
raising funds through a combination of internal and external sources of finance. You are
required to select at least 5 sources of finance. (Covers AC1.1)
(b) Assess the implications of different sources of finance and what are the legal, financial
and dilution of control implications (percentage ownerships) and risks of bankruptcy.
(Covers AC1.2)
4
(c) Evaluate appropriate sources of finance for your business: you must choose 3 sources
that would be appropriate for Green Supplies Ltd; and discuss the advantages and
disadvantages of your financing choice. (Covers AC1.3)
(d) Analyse the costs of your chosen sources of finance for Green Supplies Ltd. Provide a
brief explanation of how they would be shown in the Income Statement and in the Balance
sheet. (Covers AC2.1)
To achieve M1, State which of the source of finance explored in part (c) is a best fit for Green
Supplies Ltd. Justify your choice and explain why you consider this choice to be the best fit
for the company’s future plan.
(Task 1 covers assessment criteria AC1.1, AC1.2, AC1.3, AC2.1 & M1)
Task 2
(a) Explain the importance of financial planning and discuss why it is important to the success
of Green Supplies Ltd. (Covers AC2.2)
(b) Assess different information need of each decision makers of an organisation. Identify and
assess the information that is needed for a range of decision makers. (Covers AC2.3)
(c) Explain the impact of loan and equity finances or investment on the balance sheet and
income statement. (Covers AC2.4)
To achieve M2, You are required to identify the information needs of internal and external
stakeholders and you must choose at least five stakeholders for Green Supplies Ltd.