Reference no: EM133205420

Question 1

Camberwell Trading is a new company owned by a 21-year-old entrepreneur, who has not attended a business school. His company has become a household name within Camberwell very quickly following a local campaign in a local household newspaper and a popular local Radio Station gaining lot of sales as a result. 

He now wants to replicate this success beyond his local area to five other regions opening up five branches across London.  His team has already identified and entered into agreements on some five top range facilities for rent. He announced the intention to expand at a meeting with the Board of Directors. His experienced Board of Directors (BoD) advised him to be careful with overtrading which they indicated to be a poison pill to business if left unchecked. He did not understand the meaning of the term. As his friend who is studying for an MBA, he has turned to you for advice on the meaning and implications of this term.

1. Evaluate the term overtrading and outline the impacts it can have on a company that finds itself in this financial position. 
2. Critically evaluate at least three of the strategies that can be adopted by an organisation to deal with overtrading.
3. Ratio analysis can be used to assess whether the company is engaged in overtrading. Critically evaluate some of the indications of overtrading in business organisations

Question 2

Pargo Trading Limited is looking to expand its business operations in the course of the year. The Finance Director is looking to finance some interesting new ventures that has attractive positive NPV for investment opportunities. 

You are a new employee in the organisation and you have been requested by the Finance Director to critically review the sources of finance available to UK businesses. 

Discuss the implications for choosing one particular source rather than another.