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Virgin and Sources of Finance Source of Finance When used or could Definition Advantages Disadvantages be used Remortgage Retained Profit Selling Shares Sale of Assets Bank overdraft Bank loan Further questions: 1. Explain the difference between internal and external sources of finance? 2. Explain two reasons why Branson’s mother might have re-mortgaged in order to support his business in the early days. 3. Explain three things that a bank would want to see before considering lending money to Virgin when the business was starting up. 4. Explain two risks that Virgin Group would face if borrowing money from a bank. 5. Explain two reasons why Virgin might have floated shares on the stock exchange in 1986 rather than obtaining finance from other sources. 6. Explain two reasons why the Virgin Group might sell assets. 7. If Virgin Group was to run a fleet of company cars for its managers, why might it use hire purchase rather than buying the cars outright?
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