Do you agree with George
that at present, profit is
more important than cash
flow for Henley Couture
Ltd? (16 marks)
Received 16 marks
Profit is the reward that the owners of the business want to achieve from taking risks and making investments.
George believes that at present profit is more important than cash flow for Henley couture Ltd and one reason is
because profit can be used for future growth. Firstly, as a clothing business they want growth however they are
unable to fund this through a loan or an overdraft as they are a start-up and so are seen as risky to bank lenders thus
why they need to raise finance internally. Having profit in the business allows them to do this. Moreover, profit
allows you to reinvest and make long term investments which enables Henley couture LTD to invest in their online
activities. They need around £25,000 for this, with yearly running costs of £5,000 outside of any additional salaries.
From reviewing their financial information they do have enough finance to fund their online operations internally
and so their profit allows for the growth of Henley couture Ltd. Although they are a local monopoly they need to be
able to keep up with other businesses which can aid in making them more competitive considering that the clothing
market is highly competitive. Thereby from raising money internally, retained profits, this allows them to gain an
online presence, providing them with a competitive edge. They are aiming to grow through capital investment; with
that at present, profit is
more important than cash
flow for Henley Couture
Ltd? (16 marks)
Received 16 marks
Profit is the reward that the owners of the business want to achieve from taking risks and making investments.
George believes that at present profit is more important than cash flow for Henley couture Ltd and one reason is
because profit can be used for future growth. Firstly, as a clothing business they want growth however they are
unable to fund this through a loan or an overdraft as they are a start-up and so are seen as risky to bank lenders thus
why they need to raise finance internally. Having profit in the business allows them to do this. Moreover, profit
allows you to reinvest and make long term investments which enables Henley couture LTD to invest in their online
activities. They need around £25,000 for this, with yearly running costs of £5,000 outside of any additional salaries.
From reviewing their financial information they do have enough finance to fund their online operations internally
and so their profit allows for the growth of Henley couture Ltd. Although they are a local monopoly they need to be
able to keep up with other businesses which can aid in making them more competitive considering that the clothing
market is highly competitive. Thereby from raising money internally, retained profits, this allows them to gain an
online presence, providing them with a competitive edge. They are aiming to grow through capital investment; with
