10. Finance and accounting (A Level)
A section of Business Studies, 9609
Listing 10 of 23 questions
Occasion Cards (OC) OC is a private limited company that sells greeting cards designed using mass customisation. Customers order their cards on the Internet and can add their own design and personal message to each card. OC allows customers to download a simple Computer Aided Design (CAD) system that customers use on their home computers. OC is owned by four sisters who are also the directors of the company. OC’s employees benefit from the business being owned by a family. However, family ownership has limited the capital available for expansion. OC has increased its sales over the past few years using the Internet. Social media and viral marketing have been the basis for most of OC’s promotion. This has worked well, but the directors are aware that future sales growth may require a different approach and an increase in capital. The current owners have decided to change the legal structure of OC to a public limited company. In preparation for this change, the directors have prepared some accounting information for OC (see Table 1). Table 1: Accounting information for OC ($m) ($m) Revenue Profit margin 10% 15% Non-current assets Current assets Non-current liabilities Current liabilities Define the term ‘Computer Aided Design’ (line 4). Briefly explain the term ‘mass customisation’ (lines 1–2). Refer to Table 1. Calculate the current ratio for 2016. Explain one way in which the information in Table 1 might be useful to a potential investor. Analyse one advantage and one disadvantage to OC of using the Internet to promote the business. Evaluate the owners’ decision to change the legal structure of OC to a public limited company.
9609_w17_qp_22
THEORY
2017
Paper 2, Variant 2
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Questions Discovered
23