WFT is a primary sector business which harvests timber from trees. The Operations Manager knows there are many legal controls over business activity affecting the environment. WFT has 30 employees and uses a lot of technology to process the timber. The business is always considering ways to increase added value. WFT often needs finance. An extract from WFT’s statement of financial position is shown in Table 1.1. Table 1.1 Extract from WFT’s statement of financial position at 30 April 2024 $ Non-current assets Current assets Current liabilities Non-current liabilities Identify one non-current asset and one non-current liability. Non-current asset: Non-current liability: Calculate WFT’s current ratio in 2024. Show your working. Working: Final answer: 1 12 Outline two ways legal controls over business activity affecting the environment might affect WFT. Way 1: Way 2: Explain two factors WFT should consider when deciding on a source of finance. Factor 1: Explanation: Factor 2: Explanation: [ 1 12 Explain two ways a business might increase added value. Which do you think is the best way? Justify your answer. 1 12

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THEORY

2024

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AllPlay is a toyshop, set up by Vince in 2012. Each year Vince has met his business objectives including making a profit in 2017. AllPlay imports all of its products. Vince wants to expand by opening a second shop so he can sell a wider range of products. The cost of buying the shop is $20000. One option for finance is a bank loan. Vince’s bank manager will want to see AllPlay’s Income statement, and other financial documents. Table 1: Extract from AllPlay’s Income Statement for the year ending 30 September 2018 $ 000s X Revenue Less cost of sales Gross profit Y Expenses (including rent and marketing) Profit What is meant by ‘business objectives’? Calculate X and Y. X: Y: Identify and explain one advantage and one disadvantage to AllPlay of importing its products. Advantage: Explanation: Disadvantage: Explanation: 1 12 Identify and explain two ways in which the bank might use AllPlay’s financial documents. Way 1: Explanation: Way 2: Explanation: Do you think a bank loan is the best source of finance for Vince to choose? Justify your answer. [ 1 12

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THEORY

2018

Paper 1, Variant 1

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Aurelie is a sole trader. She started her small hotel 1 year ago using government support. Aurelie knew it would be important to build good customer relationships. Aurelie wants to analyse her financial statements using ratio analysis. An extract is shown in Table 3.1. She is worried about how the Government’s plan to introduce a new tourist tax of $1 per tourist per night might affect her business. Table 3.1 Extract of Aurelie’s Income statement for 2020 ($) Revenue Cost of sales X Gross profit Expenses Y Profit Identify two ways a government can support new business start-ups. Way 1: Way 2: Calculate X and Y. X: Y: State four financial ratios a business can use. Financial ratio 1: Financial ratio 2: Financial ratio 3: Financial ratio 4: [ 1 10 Explain two ways that the introduction of a new tourist tax might affect Aurelie’s business. Way 1: Explanation: Way 2: Explanation: Do you think offering good customer service is the best way for a small business to build customer relationships? Justify your answer. 1 10

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THEORY

2021

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HTB is a public limited company. It manufactures a range of computers. HTB spends a lot of money on advertising as it is in a competitive market. The management believes that the product is the most important element in their marketing mix. To meet increasing demand HTB is looking to expand their business. It plans to raise extra capital by issuing more shares. The Finance Director has been looking at the data in Table 1. Table 1: Selected financial data from HTB ($m) Sales Net Profit Long Term Liabilities Capital Employed What is meant by ‘public limited company’? Calculate the Return on Capital Employed for 2012. Identify and explain two reasons why shareholders might be interested in the accounts of HTB. Reason 1: Explanation: Reason 2: Explanation: Identify and explain three factors that HTB should consider before issuing more shares. Factor 1: Explanation: Factor 2: Explanation: Factor 3: Explanation: Do you think that the product is the most important element of the marketing mix for HTB? Justify your answer.

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THEORY

2012

Paper 1, Variant 2

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HTB is a public limited company. It manufactures a range of computers. HTB spends a lot of money on advertising as it is in a competitive market. The management believes that the product is the most important element in their marketing mix. To meet increasing demand HTB is looking to expand their business. It plans to raise extra capital by issuing more shares. The Finance Director has been looking at the data in Table 1. Table 1: Selected financial data from HTB ($m) Sales Net Profit Long Term Liabilities Capital Employed What is meant by ‘public limited company’? Calculate the Return on Capital Employed for 2012. Identify and explain two reasons why shareholders might be interested in the accounts of HTB. Reason 1: Explanation: Reason 2: Explanation: Identify and explain three factors that HTB should consider before issuing more shares. Factor 1: Explanation: Factor 2: Explanation: Factor 3: Explanation: Do you think that the product is the most important element of the marketing mix for HTB? Justify your answer.

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THEORY

2012

Paper 1, Variant 3

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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.

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THEORY

2013

Paper 1, Variant 1

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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

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THEORY

2022

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QAC uses batch production to make 70 different cleaning products including soap and polish. To meet increased demand for two of its products, X and Y, QAC could invest $10m in flow production using new technology. The Finance Director is worried about QAC’s cash flow position as shown in Table 1. He thinks it is important to have a high level of inventory but he also wants to improve the cash flow position. Table 1: QAC’s cash flow forecast for April – June 2017 ($000) April May June Cash in: Cash out: Labour costs Inventory costs Fixed costs Total cash out Net cash flow (60) (20) ? Opening balance (30) (50) Closing balance (30) (50) ? What is meant by ‘batch production’? Calculate the following values in June. Net cash flow: Closing balance: Identify and explain two advantages to QAC of having a high level of inventory. Advantage 1: Explanation: Advantage 2: Explanation: Identify and explain two ways (other than reducing inventory) that QAC could use to improve its cash flow position. Way 1: Explanation: Way 2: Explanation: Do you think QAC should change its method of production? Justify your answer.

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THEORY

2017

Paper 1, Variant 2

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Gomez is a sole trader. He provides painting and decorating services to business customers. His business does not benefit from any economies of scale because it is small. Gomez has to pay his suppliers within 1 month. However, he gives customers 3 months to pay. Gomez uses an old van he has borrowed from his father to travel to his customers’ offices and shops. As the van often breaks down, Gomez is thinking of buying a new van. A cash-flow forecast for the next 3 months is shown in Table 2.1. Table 2.1 Cash-flow forecast for Gomez’s business ($) June May April Cash in Y Cash out (200) X Net cash flow Opening balance Closing balance Define ‘economies of scale’. Calculate X and Y. X: Y: 1 24 Outline two factors Gomez should consider when choosing a source of finance for the new van. Factor 1: Factor 2: Explain one advantage and one disadvantage to Gomez of being a sole trader. Advantage: Explanation: Disadvantage: Explanation: [ 1 24 Do you think asking customers to pay more quickly is the best way for a small business to improve its cash-flow? Justify your answer. 1 24

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THEORY

2020

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SMR produces snack food using batch production. The snacks are sold to people watching sporting events in city Y. SMR pays bonuses to motivate its 3 part-time employees. SMR has received complaints from customers about the quality of the snacks. The business has forecast cash-flow problems in the coming months. An extract from this cash-flow forecast is found in Table 3.1. Table 3.1 Extract from SMR’s cash-flow forecast ($) June May April Total inflows Total outflows Y (500) (400) Net cash flow (800) X Opening balance (1200) (800) (300) Closing balance Calculate the values of X and Y. X: Y: Define ‘batch production’. 1 17 Identify four methods a business could use to ensure the quality of its products. Method 1: Method 2: Method 3: Method 4: Explain two ways SMR could overcome its cash-flow problems. Way 1: Explanation: Way 2: Explanation: [ 1 17 Do you think paying bonuses is the best way to motivate employees in a small business? Justify your answer. 1 17

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THEORY

2021

Paper 1, Variant 2

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