Rapid Call is a private limited company. It manufactures a range of cell phones. The demand for these is increasing. Its products have several special features that are not available from other phone manufacturers. It sells its products directly to retail shops. Rapid Call uses competitive pricing for all products. The Finance Director has been looking at the accounts. A summary is shown in Table 2. In 2011 the gross profit margin was 40%. Table 2: Profit/Loss Account for Rapid Call for year ending 30 April 2012 ($000s) Sales Cost of Sales Gross Profit Overheads Net Profit What is meant by ‘private limited company’? Calculate the gross profit margin for the year ending 30 April 2012. Identify and explain two ways in which Rapid Call’s Finance Director could use the information in Table 2. Way 1: Explanation: Way 2: Explanation: The Marketing Director is thinking about changing the channel of distribution. Identify and explain three factors that Rapid Call should consider when choosing a suitable channel of distribution. Factor 1: Explanation: Factor 2: Explanation: Factor 3: Explanation: How important is increased competition in influencing the marketing strategy of Rapid Call? Justify your answer.

0450_s12_qp_11

THEORY

2012

Paper 1, Variant 1

View

Luxury Destinations owns three hotels in country X. The business spends a lot of money on staff training. The Finance Director is pleased with the financial position of the business. ‘However, the appreciation of our country’s currency and the Government’s plan to increase taxes might cause problems to our business in the future’ he said. Table 1: Luxury Destinations financial information ($000s) Gross profit Net profit Fixed assets Current assets Current liabilities What is meant by ‘appreciation of our country’s currency’? Calculate the current ratio in 2012. Identify and explain two problems that an increase in taxes could cause for Luxury Destinations. Problem 1: Explanation: Problem 2: Explanation: Identify and explain three benefits for Luxury Destinations of training its employees. Benefit 1: Explanation: Benefit 2: Explanation: Benefit 3: Explanation: Do you think the Finance Director is right to be pleased with the financial position of the business? Justify your answer.

0450_s13_qp_11

THEORY

2013

Paper 1, Variant 1

View

Belshire Books owns a number of shops. The Finance manager is worried about the financial position of the company. An extract of the accounts is shown in Table 1. Belshire Books is facing increased competition from online booksellers selling through the Internet. Table 1: Extract from Belshire Books accounts ($000s) Net profit Current assets Current liabilities Capital Employed What is meant by ‘net profit’? Calculate the current ratio in 2012. Identify and explain two ways in which Belshire Books could improve profitability. Way 1: Way 2: Identify and explain two problems that competition from online (Internet) booksellers could cause for Belshire Books. Problem 1: Explanation: Problem 2: Explanation: Do you think that the Finance manager is right to be worried about the financial position of the business? Justify your answer.

0450_s13_qp_12

THEORY

2013

Paper 1, Variant 2

View

Tim is the Managing Director of TPW, which is a successful accountancy business. It prepares the accounts for small and large businesses and personal customers. Tim believes in a democratic management style. Employees are paid by time rate. Tim plans to change how employees are rewarded. Tim wants to invest in new information technology in the office. He is not sure that this will help the business increase its profits. Fig. 1: TPW organisational chart Managing Director Large business manager Small business manager Personal customer manager Office administration manager Accounts clerks ×7 Accounts clerks ×7 Accounts clerks ×7 Office workers ×3 What is meant by ‘paid by time rate’? Calculate the following. The span of control for the Managing Director: The number of levels in the hierarchy: Identify and explain two advantages to TPW of Tim’s democratic management style. Advantage 1: Explanation: Advantage 2: Explanation: Identify and explain two methods (other than time rate) that TPW could use to reward its employees. Method 1: Explanation: Method 2: Explanation: Do you think that introducing new information technology in the office will help improve the profitability of TPW? Justify your answer.

0450_s14_qp_13

THEORY

2014

Paper 1, Variant 3

View

AHG is an established business as it has been operating for a long time. It sells garden products including plants and flowers. AHG uses competitive pricing. The business has 4 managers and 30 other employees. All AHG’s managers use delegation. The Finance Manager is analysing AHG’s statement of financial position as she is interested in its liquidity. An extract is shown in Table 1.1. Table 1.1 Extract from AHG’s statement of financial position at 30 March 2022 ($000) Non-current assets Current assets Current liabilities Define ‘current liabilities’. Identify two examples of non-current assets. Example 1: Example 2: Outline two possible reasons why liquidity is important to AHG. Reason 1: Reason 2: 1 17 Explain two advantages to AHG of its managers using delegation. Advantage 1: Explanation: Advantage 2: Explanation: Do you think competitive pricing is the best method for an established business to use? Justify your answer. [ 1 17

0450_s22_qp_12

THEORY

2022

Paper 1, Variant 2

View

TJM is a private limited company. It is a food retailer and has 450 shops. In 2021 TJM’s revenue increased by $500 million. The Finance Director is analysing TJM’s financial statements. An extract is shown in Table 2.1. The directors are planning to expand TJM by opening 20 new shops. TJM will have to carry out a recruitment and selection process for 400 new employees. Table 2.1 Extract from TJM’s financial statements for 2021 ($m) Non-current assets Current assets Current liabilities Profit for the year Define ‘revenue’. Calculate working capital. Show your working. Outline two advantages of TJM being a private limited company. Advantage 1: Advantage 2: 1 15 Explain two possible reasons why profit might be important to TJM. Reason 1: Explanation: Reason 2: Explanation: Do you think an interview is the best way for a large business to select new employees? Justify your answer. [ 1 15

0450_s22_qp_13

THEORY

2022

Paper 1, Variant 3

View

Manfred is the Finance Director of a large public limited company BTX. After looking at the data in Table 1, Manfred was worried that BTX might be facing problems. Table 1: Selected Financial Data for BTX ($’000s) Sales Net profit Capital employed Dividends The current ratio was 1.2 in 2008 and 1.5 in 2009. What is meant by ‘dividends’? Calculate the return on capital employed (ROCE) in 2009. Explain how ROCE can be used to assess the performance of a company. Identify and explain three ways by which the company can improve its net profits. Way 1: Explanation: Way 2: Explanation: Way 3: Explanation: Do you think that the management of BTX should be worried about the performance of the company in 2009? Justify your answer.

0450_w10_qp_12

THEORY

2010

Paper 1, Variant 2

View

Roberto is the Finance Director of WWT, a large distribution company. He is looking at the data shown in Table 1. Table 1: Selected Financial Data WWT ($’000s) Sales Cost of sales Gross profit Net profit Calculate the gross profit margin for WWT in 2009. What is meant by ‘net profit’? Identify two stakeholders who might be interested in the data in Table 1. Explain why each stakeholder would be interested in the data. Stakeholder 1: Explanation: Stakeholder 2: Explanation: Using the data in Table 1, identify and explain three possible reasons why the net profit of WWT fell in 2009. Reason 1: Explanation: Reason 2: Explanation: Reason 3: Explanation: Recommend two ways that Roberto could use which might increase the future profits of WWT. Justify your answer. Way 1: Way 2:

0450_w10_qp_13

THEORY

2010

Paper 1, Variant 3

View

Izaak owns a small fish restaurant. He employs two chefs and three workers who serve in the restaurant. He has been trying to increase added value to improve profits. Izaak has been looking at the business accounts as shown in Table 1. He thinks fixed costs are too high. Izaak has received a number of complaints about food and service. He knows he must improve quality but cannot decide the best way to do this. Table 1: Extract from income statements for years ending 30 September 2015 and 2016 ($000) Revenue Cost of sales Gross profit Expenses Profit What is meant by ‘added value’? What is meant by ‘cost of sales’? Identify and explain two ways Izaak could increase revenue. Way 1: Explanation: Way 2: Explanation: 1 11 Identify and explain two problems that low quality might cause for Izaak’s business. Problem 1: Explanation: Problem 2: Explanation: Do you think Izaak should be pleased with the financial performance of his business? Justify your answer using appropriate ratios. [ 1 11

0450_w16_qp_13

THEORY

2016

Paper 1, Variant 3

View

Elton is a sole trader. He sells specialist clothing and equipment for sports, including baseball and hockey. It is a niche market. Elton started his business 5 years ago and it has remained small. A wide range of inventory is important. Elton has been looking at the financial performance of his business. The profit margin for 2018 was 35%. An extract of the accounts is shown in Table 3.1. Table 3.1 Revenue and cost information for Elton’s business for 2018 and 2019 ($) Revenue ($) Y Cost of sales ($) Gross profit ($) Expenses ($) X Profit ($) Define ‘sole trader’. Calculate X and Y. X: Y: State four factors that can influence the amount of inventory a business might hold. Factor 1: Factor 2: Factor 3: Factor 4: 1 12 Explain one advantage and one disadvantage to Elton of operating in a niche market. Advantage: Explanation: Disadvantage: Explanation: Do you think Elton should be pleased with the financial performance of his business? Justify your answer using appropriate ratios. [ 1 12

0450_w20_qp_11

THEORY

2020

Paper 1, Variant 1

View

---