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An Australian theme park wants to implement a new point-of-sale system that allows improved tracking of stock levels - HSC - SSCE Business Studies - Question 12 - 2023 - Paper 1
Question 12
An Australian theme park wants to implement a new point-of-sale system that allows improved tracking of stock levels. The system will cost $185,000 to establish. Wh... show full transcript
Worked Solution & Example Answer:An Australian theme park wants to implement a new point-of-sale system that allows improved tracking of stock levels - HSC - SSCE Business Studies - Question 12 - 2023 - Paper 1
Step 1
Which long-term source of finance would be most appropriate for this system?
Answer
The most appropriate long-term source of finance for establishing a new point-of-sale system, which has a considerable cost of $185,000, would be Leasing.
Leasing allows the theme park to acquire the system without a large upfront payment and enables the company to maintain cash flow for other operational needs. Unlike derivatives and hedging, which are more suited for risk management, and an overdraft, which is typically a short-term solution, leasing is a financing option designed for significant investment in equipment and technology.