5.1. Business finance: needs and sources
A subsection of Business Studies, 0450, through 5. Financial information and decisions
Listing 10 of 13 questions
Company WLP is a large company providing services in country Z. Fig. 1 shows the market distribution of its sales in 2009. Table 2 shows selected financial data for the company in the same year. Distribution of sales for company WLP Selected financial data for company WLP domestic sales export sales Key: Sales turnover $750m Net profit $150m Net profit margin 20% Return on capital employed 15% Fig. 1 Table 2 What is meant by the ‘net profit margin’? Calculate the value of export sales in 2009. Identify and explain two advantages to company WLP of raising extra capital from its shareholders instead of increasing its borrowing. Advantage 1: Advantage 2: The economy of country Z is experiencing a high rate of inflation. Identify and explain three ways in which high inflation might affect WLP. Way 1: Way 2: Way 3: WLP is now in financial difficulties. If WLP stops trading this will affect the interests of its stakeholders. Should the Government in country Z provide financial support in these circumstances? Justify your answer.
0450_s10_qp_12
THEORY
2010
Paper 1, Variant 2
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Company WLP is a large company providing services in country Z. Fig. 1 shows the market distribution of its sales in 2009. Table 2 shows selected financial data for the company in the same year. Distribution of sales for company WLP Selected financial data for company WLP domestic sales export sales Key: Sales turnover $750m Net profit $150m Net profit margin 20% Return on capital employed 15% Fig. 1 Table 2 What is meant by the ‘net profit margin’? Calculate the value of export sales in 2009. Identify and explain two advantages to company WLP of raising extra capital from its shareholders instead of increasing its borrowing. Advantage 1: Advantage 2: The economy of country Z is experiencing a high rate of inflation. Identify and explain three ways in which high inflation might affect WLP. Way 1: Way 2: Way 3: WLP is now in financial difficulties. If WLP stops trading this will affect the interests of its stakeholders. Should the Government in country Z provide financial support in these circumstances? Justify your answer.
0450_s10_qp_13
THEORY
2010
Paper 1, Variant 3
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PCB is a public limited company. It makes a well-known brand of mobile phones. Pricing is important as it sells in a competitive market. PCB wants to increase its product range. It plans to make luxury headphones as the demand for these is growing fast. The Operations Director has to decide whether PCB should develop its own brand of headphones or take over an existing producer. For both options, the source of finance would be a share issue. Table 1: Information on the 2 options Option 2: Buy existing producer of headphones Option 1: Develop own headphones $45m $12m – $15m Cost 3 months 12 – 18 months Time needed before product launch Existing producer has different leadership style and organisational structure Need to recruit 1 experienced designer Other information What is meant by ‘brand’? Identify two methods of pricing PCB could use for its mobile phones. Method 1: Method 2: Identify and explain two advantages to PCB of increasing the range of products it sells. Advantage 1: Explanation: Advantage 2: Explanation: 1 17 Identify and explain one advantage and one disadvantage to PCB of issuing new shares as a source of finance. Advantage: Explanation: Disadvantage: Explanation: Recommend which option for increasing the product range the directors should choose. Justify your answer using the information in Table 1. [ 1 17
0450_s17_qp_13
THEORY
2017
Paper 1, Variant 3
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Questions Discovered
13