SECTION A – Answer all questions

Question A1

Industrial  Solutions  plc  has  been  established  for  8  years  and  the  following

financial data is provided for the financial years 2018 and 2019.

Extract from Annual Report & Accounts

(a)  Use the simplified accounts shown above to calculate the following ratios for both years 2018 and 2019:

i)   Profitability   (2 ratios required – 1 to be ROCE)  = 4 marks

ii)  Gearing        (1 ratio)                                            = 2 marks

iii)  Liquidity       (2 ratios required)                            =  4 marks

iv)  Efficiency     (1 ratio)                                            = 2 marks

[12 Marks]

(b) Using your ratio calculations from question A1 (a) - please comment upon the changes in Industrial Solution’s financial position over the two trading years   under the following analysis areas:-

Profitability

Gearing

Liquidity

Efficiency

[8 Marks]

[A1Total - 20 Marks]

Question A2

(a)  Using the data provided in Question A1, calculate the monetary amount of

working capital Industrial Solutions had available for both 2018 and

2019 trading years?

[2 Marks]

(b)  Explain the ways in which Industrial Solutions could improve its working

capital position.

[8 Marks] [A2 Total – 10 Marks]

Question A3

Two best friends from dental school have decided to set up their own dental        surgery. They cannot decide whether to form a partnership or a limited company. Discuss the advantages and disadvantages of both business formations,             including the position regarding any debt the business may have.

[10 Marks]

[A3 Total – 10 Marks]

Question A4

All types and sizes of businesses need finance to operate, whether they are a small start-up business or a large multinational company expanding into new countries.

(a) Identify and briefly outline two internal and two external sources of finance available to business entities.

[4 Marks]

(b) Identify the sources of finance that may be available to a new start-up   business and explain the range of factors that will influence the lender’s decision.

[8 Marks]

(c) Business Loans Bank has declined Flyaway plc loan request, saying ‘the  Company is too highly geared’ . Explain what this means and what options are now available to Flyaway plc.

[8 Marks]

[A4 Total - 20 Marks]