Name: _____Usmon_____________________________

October Break - Exam Questions

Date:

Time: 1 hour

Total marks available: 60

Total marks achieved: ______

Q1.

Huawei is a leading global provider of information and communications technology, infrastructure and smart devices.
In March 2011, over one million of its C8500 smartphones were sold in China following its launch.

It now manufactures a wide variety of different products including Huawei smartphones, watches and tablets. In
recent years Huawei has won many awards. In 2018 it was named the 68th most valuable brand by Best Global
Brands. In 2019 it introduced a smartphone which had new photographic technology.

State one reason why Huawei may use share capital as a source of finance.
(1)
Huawei can use share capital as a source of finance to fund the manufacturing of smartphones watches
and tablets

(Total for question = 1 mark)

Q2.

Tata Motor Company began trading in 1868, and is now part of a large group of companies that is estimated to be
worth $100 billion. Tata Motor Company manufactures a wide range of cars, buses and trucks. It is India's largest
maker of vehicles with manufacturing centres in many countries including Korea, Italy and the UK.

One of the main aims of Tata Motor Company is to produce goods that the public want and need. It is currently
working on electric cars that are more environmentally friendly. Tata Motor Company plays an active role in
community development such as building schools, houses and investing in the health and welfare of local people.

(Source adapted from: https://www.tatamotors.com/about-us/)

The Chairman of Tata Motor Company works closely with the Finance Department to ensure that the company
maintains its financial position. Figure 2 shows the revenue for Tata Motor Company, 2011–2017.

Define the term revenue.

(1)
Revenue is money made from the sales of goods and services

(Total for question = 1 mark)

Q3.

Define the term venture capital.

(1)
Venture capital is money given by investors to high-risk projects, usually new and up and coming
businesses

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(Total for question = 1 mark)

Q4.

Define the term personal savings.

(1)
the money that a person, rather than a business or organization, keeps in a personal account

(Total for question = 1 mark)

Q5.

IKEA is a well-known home furniture retailer with stores throughout the world. It was started in 1943 by Ingvar
Kamprad when he was given some money by his father for doing well at school. He wanted to produce furniture at a
price that people could afford to buy.

He realised that transporting furniture to customers was difficult as goods were often damaged. He developed flat
packs to avoid damage. A flat pack contained all the materials needed to self-assemble a table, a chair or a bed.

All IKEA stores are run as franchises.

IKEA aims to retain as many of its employees as possible.

Define the term overdraft.

(1)
A deficit in a bank account caused by drawing more money than the account holds
(Total for question = 1 mark)

Q6.

Define the term insolvency.

(1)
The state of a company in which they are unable to pay off their debts
 (Total for question = 1 mark)

Q7.

Define the term break-even.

(1)
The point in which the revenue is proportional to the cost or when the profit/loss reaches 0

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(Total for question = 1 mark)

Q8.

An extract from Apple's 2014 statement of financial position is shown in Figure 2 below.

Define the term 'current liabilities'.

(1)
Liabilities that have to be paid within a short period of time

(Total for question = 1 mark)

Q9.
Tata Motor Company began trading in 1868, and is now part of a large group of companies that is estimated to be
worth $100 billion. Tata Motor Company manufactures a wide range of cars, buses and trucks. It is India's largest
maker of vehicles with manufacturing centres in many countries including Korea, Italy and the UK.

One of the main aims of Tata Motor Company is to produce goods that the public want and need. It is currently
working on electric cars that are more environmentally friendly. Tata Motor Company plays an active role in
community development such as building schools, houses and investing in the health and welfare of local people.

(Source adapted from: https://www.tatamotors.com/about-us/)

The Chairman of Tata Motor Company works closely with the Finance Department to ensure that the company
maintains its financial position. Figure 2 shows the revenue for Tata Motor Company, 2011–2017.

Outline one reason why Tata Motor Company uses overdrafts.

(2)
Tata motors could use overdrafts to cover short term cash flow issues, allowing them to cover immediate
expenses or unexpected costs

(Total for question = 2 marks)

Q10.

Apple is a US technology company specialising in branded devices such as iPods,

iPads and iPhones. These brands are well known around the world. In 2015,
Apple was recognised as the most valuable global brand by Interbrand (a market
research group).

In 2016, revenue from Apple products fell for the first time in over ten years.
To improve profitability, Apple now intends to focus on its new products, such as the
Apple watch. Following the collection of primary market research, Apple have also
improved their social media presence and now provide advice and customer support
using Twitter.

Outline one reason why Apple makes use of trade payables.

(2)
Apple makes use of trade payables to manage its cash flow more efficiently, allowing it to delay payments
to suppliers while still receiving goods and services. This helps the company maintain liquidity and invest
in their new products, like the apple watch.
 (Total for question = 2 marks)
Q11.

NEXT is a well-known clothing retailer that operates in 70 countries and employs over 43,000 employees. Since
NEXT commenced trading it has introduced many other products to its range such as home interiors, flowers and a
wedding list service.

In 1999 NEXT launched its own online shopping platform, enabling customers to purchase its products where ever
they live. It continues to improve its customer service by introducing new initiatives such as next day delivery.

NEXT mainly uses its own factories for production. However, it does purchase some clothes such as ladies dresses
from Turkish factories.

NEXT predicts that its £727 million sales will grow by 3.2% next year.

Calculate the predicted sales for next year. You are advised to show your working.
(2)

(Total for question = 2 marks)

Q12.

Yellow, a clothing retailer, is part of BEXIMCO Textiles Limited. Yellow opened in 2004 and now has 15 stores
across Bangladesh and Pakistan, with new stores opening in Dubai and Toronto. Yellow clothes are mainly
manufactured in Bangladesh. Some are bought from manufacturers in other countries. Yellow expects its suppliers
and manufacturers to provide fair wages and safe working conditions. It requires every manufacturer to commit to
meeting recognised health and safety standards, be ethical and environmentally sustainable. It encourages all of its
manufacturers to use Kaizen.

In 2017 BEXIMCO had a total revenue of £147.5 million. Yellow's revenue for the same year was £10.68 million.

Calculate, to 2 decimal places, the percentage of revenue that Yellow contributed to BEXIMCO's total revenue.
(2)
(Total for question = 2 marks)
Q13.

Tata Motor Company began trading in 1868, and is now part of a large group of companies that is estimated to be
worth $100 billion. Tata Motor Company manufactures a wide range of cars, buses and trucks. It is India's largest
maker of vehicles with manufacturing centres in many countries including Korea, Italy and the UK.

One of the main aims of Tata Motor Company is to produce goods that the public want and need. It is currently
working on electric cars that are more environmentally friendly. Tata Motor Company plays an active role in
community development such as building schools, houses and investing in the health and welfare of local people.

(Source adapted from: https://www.tatamotors.com/about-us/)

The Chairman of Tata Motor Company works closely with the Finance Department to ensure that the company
maintains its financial position. Figure 2 shows the revenue for Tata Motor Company, 2011–2017.

Calculate to 2 decimal places, the percentage increase in revenue from 2011 to 2017. You are advised to show your
working.
(2)

(Total for question = 2 marks)

Q14.

Hans Raj Mahajan Worldwide (HRMW) is an established manufacturer of sports equipment and sportswear in India.
It is a family-run business, which started trading in 1925 and since then has grown to become an established
business. Its products are exported across the world. These include footballs, boxing gloves, hockey sticks and
sports clothing.

HRMW employs staff to design the products it manufactures. The aim is to add features so that the products are
better than any others on the market.

If HRMW produce tennis racquets with the following costs:

Fixed costs = 300 000 Rupees

Variable costs = 3 000 Rupees

Sale price = 5 000 Rupees

Calculate the number of tennis racquets that would have to be made to break-even. You are advised to show your
working.
(2)

(Total for question = 2 marks)

Q15.

In 1985 Emirates started its airline business with just two aircraft. It is now a well-known airline with over 265 aircraft
flying to over 180 destinations around the world.

Emirates has won many awards for service and reliability. Until 2016 passengers rated Emirates the leading airline
to travel with. However, in 2017 its rating dropped from first to fourth.

Saving the environment in which we all live is important. The Chairman ensures that Emirates works hard to recycle
many of the materials it uses and to reduce atmospheric pollution from the fuel that powers its aircraft. Water
consumption for washing aircraft has been reduced, newspapers and other paper products collected from Emirates
aircraft cabins are recycled. Emirates uses a variety of methods to monitor its employees when carrying out these
jobs. For these roles Emirates uses a short chain of command.

Emirates used 13,457,776 litres of petrol in 2016–2017. In 2017–2018 it reduced this figure by 12.5%.

Calculate the number of litres of petrol that Emirates used in 2017–2018. You are advised to show your workings.
(2)

(Total for Question = 2 marks)

Q16.

In 1985 Emirates started its airline business with just two aircraft. It is now a well-known airline with over 265 aircraft
flying to over 180 destinations around the world.

Emirates has won many awards for service and reliability. Until 2016 passengers rated Emirates the leading airline
to travel with. However, in 2017 its rating dropped from first to fourth.

Figure 3 shows part of a cash flow forecast for Emirates.

Calculate the net cash flow for June 2017. You are advised to show your working.
(2)

(Total for Question = 2 marks)

Q17.

Cadbury is part of the multinational Mondelez business. In 2017 Mondelez had a gross profit of $10.3 million and a
revenue of $25.9 million.

Calculate, to two decimal places, the gross profit margin. You are advised to show your working.
(2)

(Total for question = 2 marks)

Q18.

NEXT is a well-known clothing retailer that operates in 70 countries and employs over 43,000 employees. Since
NEXT commenced trading it has introduced many other products to its range such as home interiors, flowers and a
wedding list service.

In 1999 NEXT launched its own online shopping platform, enabling customers to purchase its products where ever
they live. It continues to improve its customer service by introducing new initiatives such as next day delivery.

NEXT mainly uses its own factories for production. However, it does purchase some clothes such as ladies dresses
from Turkish factories.

NEXT continually monitors progress so that it can measure the success of its business. It aims to do this through
improving manufacturing techniques and cutting costs, whilst still maintaining the quality of the goods produced.

Figure 2 shows selected financial information for NEXT in 2019.

Calculate to two decimal places the operating profit margin for NEXT in 2019. You are advised to show your
working.
(2)

(Total for question = 2 marks)

Q19.

The LEGO Group is a privately-owned business in Denmark. The business was founded in 1932 by the Kristiansen
family. The family still owns it. The name LEGO is an abbreviation of two Danish words, 'leg godt' which means 'play
well'. It is now one of the world's largest manufacturers of toys with 15 factories and over 18,000 employees around
the world.

LEGO manufactures toys, games and art materials for boys and girls of all ages, and products from films such as
Star Wars and Harry Potter. It believes that children are the role models of the future and playing with LEGO can
support children in a developing and complex world.

In 2019 LEGO had current assets of 34 946 million DKK and current liabilities of 12 763 million DKK.

Calculate, to two decimal places, the current ratio in 2019. You are advised to show your working.
(2)

(Total for question = 2 marks)

Q20.

Most people recognise Heinz for the phrase '57 varieties' even though it now produces many more than the original
57 varieties. H J Heinz, the founder of the Heinz business, believed the phrase sounded lucky.

Kraft Heinz is a world-wide producer of food products. It was formed from the merger of Kraft Foods and Heinz in
2015. This created the third largest food and drinks business in the USA and the fifth largest food and drinks
business in the world.

Kraft Heinz has over 24 different brands, including Greenseas in Australia and Nutri+Plus in New Zealand. America
has the largest number of brands from Maxwell House to Cool Whip. Kraft Heinz produces many different products
including tomato sauce, 'Mac&Cheese', pasta and its famous baked beans that are used and eaten by many people.

Kraft Heinz uses many methods to advertise its products. These include posters, billboards and leaflets in
supermarkets.

Explain one reason why some businesses use crowdfunding as a source of finance.
(3)
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(Total for question = 3 marks)

Q21.

Most people recognise Heinz for the phrase '57 varieties' even though it now produces many more than the original
57 varieties. H J Heinz, the founder of the Heinz business, believed the phrase sounded lucky.

Kraft Heinz is a world-wide producer of food products. It was formed from the merger of Kraft Foods and Heinz in
2015. This created the third largest food and drinks business in the USA and the fifth largest food and drinks
business in the world.

Kraft Heinz has over 24 different brands, including Greenseas in Australia and Nutri+Plus in New Zealand. America
has the largest number of brands from Maxwell House to Cool Whip. Kraft Heinz produces many different products
including tomato sauce, 'Mac&Cheese', pasta and its famous baked beans that are used and eaten by many people.

Kraft Heinz uses many methods to advertise its products. These include posters, billboards and leaflets in
supermarkets.

Explain one disadvantage to a business of using retained profits to purchase goods and services.
(3)
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(Total for question = 3 marks)

Q22.

Explain one reason why cash flow forecasts are important for a business.
(3)
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(Total for question = 3 marks)

Q23.

Most people recognise Heinz for the phrase '57 varieties' even though it now produces many more than the original
57 varieties. H J Heinz, the founder of the Heinz business, believed the phrase sounded lucky.

Kraft Heinz is a world-wide producer of food products. It was formed from the merger of Kraft Foods and Heinz in
2015. This created the third largest food and drinks business in the USA and the fifth largest food and drinks
business in the world.

Kraft Heinz has over 24 different brands, including Greenseas in Australia and Nutri+Plus in New Zealand. America
has the largest number of brands from Maxwell House to Cool Whip. Kraft Heinz produces many different products
including tomato sauce, 'Mac&Cheese', pasta and its famous baked beans that are used and eaten by many people.

Kraft Heinz uses many methods to advertise its products. These include posters, billboards and leaflets in
supermarkets.

Explain one purpose for a business of the statement of financial position.

(3)
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(Total for question = 3 marks)

Q24.

Apple is a US technology company specialising in branded devices such as iPods,

iPads and iPhones. These brands are well known around the world. In 2015,
Apple was recognised as the most valuable global brand by Interbrand (a market
research group).

In 2016, revenue from Apple products fell for the first time in over ten years.
To improve profitability, Apple now intends to focus on its new products, such as the
Apple watch. Following the collection of primary market research, Apple have also
improved their social media presence and now provide advice and customer support
using Twitter.

An extract from Apple's 2014 statement of financial position is shown in Figure 2 below.

Analyse the statement of financial position in terms of its usefulness to Apple.

(6)
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(Total for question = 6 marks)

Q25.

IKEA is a well-known home furniture retailer with stores throughout the world. It was started in 1943 by Ingvar
Kamprad when he was given some money by his father for doing well at school. He wanted to produce furniture at a
price that people could afford to buy.

He realised that transporting furniture to customers was difficult as goods were often damaged. He developed flat
packs to avoid damage. A flat pack contained all the materials needed to self-assemble a table, a chair or a bed.

All IKEA stores are run as franchises.

IKEA continually reviews the products it makes to meet the demands of its customers. Changing the design of
bedroom furniture to meet the needs of a couple setting up home or of parents refurnishing their children's bedroom.

Figure 3 shows the value of IKEA's inventory for 2019 and 2020.

Analyse why IKEA uses statements of comprehensive income to assess its business performance.
(6)
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(Total for question = 6 marks)

Q26.

Hans Raj Mahajan Worldwide (HRMW) is an established manufacturer of sports equipment and sportswear in India.
It is a family-run business, which started trading in 1925 and since then has grown to become an established
business. Its products are exported across the world. These include footballs, boxing gloves, hockey sticks and
sports clothing.

The Indian Government has said that HRMW is one of the top 10 businesses in India. HRMW has been given more
than 50 awards for its performance in exporting and for the quality of its products.

Figure 3 shows HRMW's possible financial situation.

Analyse why a bank would be interested in HRMW's financial documents if it were to apply for a loan to develop new
sports products.
(6)
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