3.2 Sources of finance questions for IB Business Management

Hanami Noodle House

[1] Hanami Noodle House (Hanami) is a private limited company that runs six ramen restaurants in Fukuoka, Japan. It was founded in 2016 by chef Kaito Mori, who owns 80 % of the shares; his sister Yui owns the rest and manages the company’s finances. Hanami is known for its slow-cooked pork broth and for buying noodles from a small family supplier, Ono Seimen.

[2] Hanami’s latest final accounts show that profit for the year rose by 35 %, mostly because two new restaurants were busy from their first week. Kaito wants to open four more restaurants in Kitakyushu over the next two years, at a cost of about ¥160 million.

[3] Yui has shown the final accounts to Hanami’s bank, which is willing to lend ¥120 million over eight years, secured on the company’s kitchen equipment. A business angel, Haruto Sato, has also offered ¥160 million in return for 30 % of Hanami’s shares and a seat on the board. Haruto has experience of expanding restaurant chains in Osaka.

[4] News of the profit increase has spread. Kitchen staff have asked for a 6 % pay rise. Hanami has also asked Ono Seimen to let it pay for noodles after 60 days instead of 30; because Hanami’s orders are now so large, Ono Seimen wants to be sure that Hanami can be relied on before it agrees.

Rangoli Textiles

[1] Rangoli Textiles Ltd (Rangoli) is a private limited company in Surat, India, owned by the Mehta family. It weaves and dyes cotton fabric for clothing brands in India and Europe. Demand from European brands for organic cotton fabric has grown quickly, and Rangoli’s factory has been running at full capacity since 2024.

[2] In 2025 Rangoli took out a long-term bank loan to buy new looms. Its finance director, Kavita Rao, now proposes building a second factory in 2026 at a cost of ₹500 million. The bank has offered a further 10-year loan at 11 % interest a year.

[3] Rohan Mehta, the chairman, would rather avoid more debt. A private investor has offered to buy new shares in Rangoli for ₹500 million, which would give her 30 % of the company and a seat on the board. Several family shareholders are unhappy about giving up this much control.

Table 1: Extracts from Rangoli’s statements of financial position as at 31 March (₹ million)

Table 2: Other information

Read the resources and answer the questions that follow.

Ofure Lights Ltd (OL)

OL is a social enterprise in Benin City, Nigeria, founded in 2019 by Ofure Igbinedion, an electrical engineer. It sells solar home kits (a lantern, two bulbs and a phone charger) to households with no connection to the electricity grid. Customers pay a deposit of NGN 4 000 and then small weekly payments by mobile phone for 12 months, after which they own the kit. OL reinvests 80 % of its profits. Its mission is “clean light for every off-grid home in West and Central Africa”. OL has 38 000 customers in southern Nigeria and wants to expand into neighbouring Cameroon.

Resource 1: News article, *Central Africa Energy Review*

Around 6 million Cameroonians live without electricity, most of them in rural areas, where families spend up to a fifth of their income on kerosene for lamps. Kerosene smoke causes breathing problems, and lamp fires injure hundreds of children every year. Mobile money is used by most adults, mainly through two large networks. Cameroon has two official languages: French is spoken in eight of its ten regions and English in the North-West and South-West regions, where an armed conflict since 2017 has made travel and business dangerous. Several foreign solar firms have entered the market, but few offer pay-as-you-go payment.

Resource 2: Email from Babajide Adeyemi, OL’s finance manager, to Ofure

Entering Cameroon will cost about USD 900 000 in the first two years: warehouse, staff, stock and marketing. We have two offers. An impact investor will lend USD 1.2 million at 8 % interest over five years. A foundation will give a grant of USD 400 000, but only if we report every quarter on the number of children who no longer use kerosene lamps. Remember that 9 % of our Nigerian customers fall behind with weekly payments, and the naira has lost value against the US dollar, which makes our imported solar panels more expensive.

Resource 3: Social media posts from OL customers in Nigeria

“My children now do homework at night without smoke in their eyes. Thank you OL!” (Esosa, Edo State)

“My kit stopped charging three weeks ago and I am still waiting for the repair man. I still have to pay every week.” (Chinedu, Delta State)

Resource 4: Email from Mme Ngono, director of Fondation Mbouda Santé, a Cameroonian NGO

Our 60 village health workers in the West and Littoral regions visit thousands of households every month. They know every family and are trusted. We would be happy to sell OL kits and collect information on kerosene use in return for 10 % of the sales value. Our workers speak French and local languages; very few speak English.

Resource 5: Selected data

Pedalia Bikes

[1] Pedalia Bikes (PB) is a private limited company in Bologna, Italy, founded in 2019 by Giulia Ferri and Marco Conti. It assembles electric bicycles from imported frames, motors and batteries, and sells them through 85 independent bicycle retailers in Italy, Austria and Switzerland. To win shelf space from larger brands, PB gives its retailers 60 days to pay.

[2] Sales are highly seasonal: retailers order most of their stock between February and May, ready for spring and summer. PB pays its staff and its rent every month, all year round. During a shortage of battery cells in 2025, Marco bought a year’s supply of batteries in advance, and the Chinese supplier insisted on payment before shipping. PB’s warehouse is now full of stock.

[3] In 2025 PB made a profit for the third year in a row. However, in January 2026 its bank overdraft reached its €150 000 limit and PB paid two of its frame suppliers late. One supplier has warned that it will only deliver in future if PB pays cash on delivery.

[4] Giulia has prepared a cash flow forecast, which shows that PB will need an extra €120 000 by March. A debt factoring company has offered to pay PB 85 % of the value of each invoice as soon as it is issued and the rest, minus a fee of 4 % of the invoice value, when the retailer pays. Marco prefers to ask retailers to pay within 30 days instead, and to offer a 2 % discount for payment within 10 days. Giulia worries that retailers will switch to competitors if PB shortens its credit terms.

Baltic Freight Solutions

[1] Baltic Freight Solutions (BFS) is a logistics company based in Riga, Latvia. It stores and transports goods for food retailers and online sellers in the Baltic states. In 2025 BFS borrowed €1.5m, at an interest rate of 7 % a year, to buy a fleet of refrigerated trucks.

[2] Later in 2025 BFS lost its contract with a supermarket chain, and its warehouse in Daugavpils has been empty since September. The warehouse has a book value of €2.0m and still costs BFS €80 000 a year in security, insurance and maintenance.

[3] The finance director, Ilze Kalniņa, proposes selling the warehouse for €2.0m. She would use €600 000 to clear BFS’s bank overdraft and €1.4m to repay part of its long-term loans. The operations director, Andris Ozols, disagrees: online sales in the region are growing quickly and he believes BFS could win new storage contracts within a year. Property prices in Daugavpils are currently low.

Table 1: Extracts from BFS’s final accounts for the years ending 31 December (€000)

In 2025 the bank overdraft was €600 000.

Table 2: Selected ratios for BFS in 2024

Khubz Amal

Khubz Amal (“bread of hope”) is a social enterprise bakery in East Amman, Jordan, founded in 2019 by Leila Haddad. It trains and employs refugee women from Syria and Iraq, many of whom are the only earners in their families and have found it hard to get formal jobs. It sells bread and pastries to cafés, hotels and offices. All surpluses are reinvested in training.

Resource 1: Khubz Amal key figures, 2025

Resource 2: Email from the purchasing manager of a hotel group to Leila

Our four hotels in West Amman would like Khubz Amal to supply 800 croissants and 600 bread rolls every morning, delivered by 6.30 a.m., starting next year. We currently make these ourselves but would prefer to outsource them to a supplier with a social mission. We would need consistent quality and a two-year contract.

Resource 3: Options for a second bakery, prepared by Leila’s operations manager

Resource 4: Social media post by Rania, a Khubz Amal baker

Khubz Amal changed my life. But the bus from my home takes over an hour and costs a lot of my wage. Many of my friends in Mafraq would love this work, but they cannot travel to Amman every day. #BreadOfHope

Resource 5: Extract from a business newspaper

Hotels and offices in Amman are increasingly choosing suppliers with ethical credentials. But social enterprises that grow too fast can struggle: several have lost contracts after failing to deliver on time, and grants for refugee projects in Jordan are falling as donors shift their attention elsewhere.