CPF is a clothing retailer. It is a private limited company. It has 4 shops and 30 employees. The Finance Director is concerned about the amount of current assets because working capital is important. The amount of retained profit is also low. CPF's directors are planning to expand the business by opening a new shop. A suitable source of long-term finance will need to be identified. The plan to expand will affect many of CPF's stakeholder groups.

1. (a)Define 'retained profit'.[2]
2. (b)Define 'current assets'.[2]
3. (c)Outline two possible reasons why working capital is important for CPF. Reason 1: Reason 2:[4]
4. (d)Explain one way each of the following stakeholder groups might be affected by CPF's plans to expand its business. Employees: Explanation: Suppliers: Explanation:[6]
5. (e)Do you think it is better for a private limited company to use debt (e.g. a loan) or equity (issuing more shares) as a source of long-term finance? Justify your answer.[6]