HYT is a travel business which sells holidays. One of its objectives is growth. Last year HYT completed a takeover of one of its competitors. External sources of finance were used to fund this growth. HYT now has 460 shops and 4000 employees. The Human Resources Director knows there are benefits and limitations for a business of having full-time employees. HYT's managers use ideas from Herzberg's motivational theory to keep employees motivated. Good internal communication is important for HYT. Identify two advantages to a business of using external sources of finance. Advantage 1: Advantage 2: .......................................................................................................................................

Business

IGCSE&ALevel

CAIE

Exam No：0450_s25_qp_13 Year：2025 Question No：4(b)

Answer:

Award 1 mark per advantage (max 2).
Points might include:
- Able to raise funds quicker / quickly
- May be able to raise full / large(r) amount of finance
- Can use internal sources / profit for other purposes
- Provider may offer advice/support

Other appropriate responses should be credited.

Knowledge points:

5.1.1.1. The main reasons why businesses need finance, e.g. start-up capital, capital for expansion and additional working capital

5.1.1.2. Understand the difference between short-term and long-term finance needs

5.1.2.1. Internal sources and external sources with examples

5.1.2.2. Short-term and long-term sources with examples, e.g. overdraft for short-term finance and debt or equity for long-term finance

5.1.2.3. Importance of alternative sources of capital, e.g. micro-finance, crowd-funding

5.1.2.4. The main factors considered in making the financial choice, e.g. size and legal form of business, amount required, length of time, existing loans

5.1.2.5. Recommend and justify appropriate source(s) of finance in given circumstances

Answer:

Knowledge points:

Solution:

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