
	Trending ▼ ICSE CBSE 10th ISC CBSE 12th CTET GATE UGC NET Vestibulares ResFinder

GCE JAN 2007 : (A2 7) Finance

20 pages, 16 questions, 0 questions with responses, 0 total responses,

	gce	+Fave Message
	Profile Timeline Uploads Q & A

Home > gce >

Instantly get Model Answers to questions on this ResPaper. Try now!
NEW ResPaper Exclusive!

Formatting page ...

Centre Number 71 Candidate Number ADVANCED General Certificate of Education January 2007 GCE Applied Business assessing Finance A6B11 Assessment Unit A2 7 [A6B11] WEDNESDAY 17 JANUARY, MORNING TIME 1 hour 30 minutes. INSTRUCTIONS TO CANDIDATES Write your Centre Number and Candidate Number in the spaces provided at the top of this page. Write your answers in the spaces provided in this question paper. Answer all three questions. 1 10.06.06ML 2 15.08.06HF 3 26.10.06BP INFORMATION FOR CANDIDATES The total mark for this paper is 80. Quality of written communication will be assessed in all questions. Figures in brackets printed down the right-hand side of pages indicate the marks awarded to each question or part question. For Examiner s use only Question Number ADVICE FOR CANDIDATES You are advised to take account of the marks for each part question in allocating the available examination time. If you do not have sufficient space to complete your answers, you may use the additional pages at the back of the booklet. A6B1J7 1868 1 2 3 Total Marks Marks Study the information below and answer the questions that follow. 1 Antrim Coast Mobiles Limited is a recently formed private company, which is producing and selling the latest mobile phones throughout Ireland, and is aiming to expand its operations into the European market. The following is a trial balance for the financial year ended 31 December 2006: Dr Ordinary Share Capital Sales Purchases Opening Stock Selling Expenses Administration Expenses Distribution Costs Debenture Interest Premises Vehicles Equipment Debentures Retained Earnings Bank Cr 30 000 59 000 5000 1000 1000 2000 2000 1000 20 000 50 000 10 000 11 000 0 8000 100 000 100 000 Notes: 1. Closing Stock is valued at 1000. 2. Depreciation of vehicles during the year amounted to 5000; depreciation of equipment during the year amounted to 1000. 3. Proposed Dividend is 6000. 4. Corporation Tax should be provided for, amounting to 4000. Using the information noted, you are required to prepare the financial statements for the financial year ended 31 December 2006, in accordance with established accounting principles. 1 10.06.06ML 2 15.08.06HF 3 26.10.06BP As the above information was being printed out from the computer system, the printer malfunctioned and could not print some of the data from the draft financial statements (noted below). Sean, the accountant, enlists your help in preparing the financial statements. A6B1J7 1868 2 [Turn over Antrim Coast Mobiles Limited Trading, Profit and Loss Account for the year ended 31 December 2006. ) Sales 59 000) Cost of Sales (5000) ) Gross Profit 54 000) Selling Expenses 1000 Distribution Costs 2000 Administration Expenses 2000 Depreciation Vehicles 5000 Depreciation Equipment 1000 (11 000) ) Profit before Interest and Tax 43 000) Interest on Loans Profit before Tax Tax Profit after Tax Examiner Only Marks Remark (1000) ) 42 000) (4000) ) 38 000) Less Dividend Proposed 1 10.06.06ML 2 15.08.06HF 3 26.10.06BP Retained Earnings for the Year Antrim Coast Mobiles Limited Balance Sheet as at 31 December 2006. Cost Deprec. NBV ) Fixed Assets Premises 20 000 0) 20 000 Vehicles 50 000 Equipment 10 000 (1000) ) 80 000 (6000) 74 000 Current Assets Closing Stock 1000 Bank 8000 9000 Current Liabilities Dividend Proposed Corporation Tax 4000 Working Capital Long Term Liabilities Debenture Net Assets (11 000) ) 62 000) ) Ordinary Share Capital Retained Earnings Capital Employed [12] A6B1J7 1868 3 [Turn over Study the information below and answer the questions that follow. 2 Anne works as a finance manager for Belfast Bakeries. The business wishes to invest in a new machine to produce apple pies. Pete, the production manager, meets Anne to review the estimated production, sales and costing data. He has obtained the following information related to this investment project: Year 1 Year 2 Year 3 No. of apple pies produced/sold 100 000 100 000 50 000 Sales Revenues Variable Costs 35 000 5000 45 000 15 000 22 500 7500 The cost of the new machine is 60 000, paid at the start of the project. The new machine is expected to depreciate by 20 000 per year for each year of the project. The discount factor to be used is 10%. The relevant discount factors are summarised as follows. Year 1 10%DF 0.9091 2 0.8264 3 0.7513 It may be assumed that all cashflows occur evenly throughout each year and that normal conventions apply regarding the use of discounting. 1 10.06.06ML 2 15.08.06HF 3 26.10.06BP Unfortunately, Anne has taken ill during the meeting, and has asked you, as her deputy, to assist Pete in reviewing the project. Anne had already started work on the detailed calculations, and you are required to finish her workings as far as the information permits. A6B1J7 1868 4 [Turn over (Note: Candidates may present their calculations/workings rounded to the nearest throughout subsections (a), (b) and (c) as appropriate.) Examiner Only Marks Remark (a) Calculate the payback period for this project: Initial Investment Year 1 Annual Cumulative Net Net Cashflow( ) Cashflow( ) ( 60 000) ( 60 000) 30 000 ( 30 000) Year 2 Year 3 15 000 Payback period is: ________________ [4] 1 10.06.06ML 2 15.08.06HF 3 26.10.06BP You may use this space for your calculations: A6B1J7 1868 5 [Turn over (b) Calculate the accounting rate of return (ARR) for this project: Examiner Only Marks Remark Total Sales Revenues ( ) Less: Total Variable Costs ( ) Less: Total Depreciation ( ) 60 000)) Total Profit Initial Investment 60 000)) Accounting Rate of Return (%) [4] (Note: Accounting Rate of Return may be calculated as (Total Profit/Initial Investment) 100%) 1 10.06.06ML 2 15.08.06HF 3 26.10.06BP You may use this space for your calculations: A6B1J7 1868 6 [Turn over (c) Calculate the net present value (NPV) of this project: Examiner Only Marks Year 1 Annual Net Cashflow( ) Discount Factor (10%) 30 000 Remark 0.9091 2 0.8264 3 Present Value ( ) 0.7513 Total Present Value Less: Initial Investment 60 000 Net Present Value [7] 1 10.06.06ML 2 15.08.06HF 3 26.10.06BP You may use this space for your calculations: A6B1J7 1868 7 [Turn over (d) With reference to your calculations and other related issues, evaluate the investment as proposed, stating clearly your final recommendation to Pete. Examiner Only Marks Remark _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ 3 26.10.06BP _________________________________________________________ _________________________________________________________ 1 10.06.06ML 2 15.08.06HF _________________________________________________________ _________________________________________________________ _________________________________________________________ ______________________________________________________ [12] A6B1J7 1868 8 [Turn over Study the information below and answer the questions that follow. 3 The Viridian Group plc was established in February 1998, and has business interests in the purchase, transmission, distribution and supply of electricity in Northern Ireland (NI). This company in turn owns Northern Ireland Electricity (NIE), however, neither it nor NIE are actually engaged in the generation of electricity this is the responsibility of individual power stations within NI (e.g. Premier Power) and other electricity suppliers in Great Britain. The electricity regulator Ofreg has the power to regulate tariffs levied in relation to the electricity supplied to customers of NIE. The aim in this instance is to safeguard the interests of consumers in NI against excessive profit-taking by NIE, which in turn limits the growth potential (in terms of sale revenues and profits) of this business sector. The Viridian Group plc is also engaged in a range of unregulated business activities. Indeed, during the year 2003, the group sold various assets including the Moyle Interconnector (an electricity connector between NI and Scotland), Fleet Solutions , and Lislyn (private limited companies within their ownership). During 2004, the group expressed an interest in building an Ireland Wales electricity connector. 1 10.06.06ML 2 15.08.06HF 3 26.10.06BP The Viridian Group plc is quoted on the London and Dublin Stock Exchanges, enabling investors to trade in the company s shares. Financial data in respect of the financial years 2003 and 2004 is summarised in Table 1. A6B1J7 1868 9 [Turn over Table 1 (Summary Financial Data) Financial Year ended: 31 March 2003 31 March 2004 m m 781.2 834.2 Profit Before Tax (Operating Profit) 78.4 89.2 Dividends 43.2 44.8 1089.0 967.8 Current Assets 226.4 231.6 Current Liabilities 284.9 244.7 Long Term Debt 622.0 550.4 33.3 33.3 Reserves 213.7 243.7 Capital Employed 247.0 277.0 Sales Fixed Assets Share Capital The Viridian Group plc has an issued share capital of 133 015 906 Ordinary 25p shares. An opinion expressed by investment analysts states that the Viridian Group plc operates in a very regulated and mature industry with limited growth potential . 1 10.06.06ML 2 15.08.06HF 3 26.10.06BP Sources: adapted from(i) Stock Market Annual 2005 (p. 122); and (ii) Stock Market Annual 2004 (p. 65); Published by Private Research, Dalkey, Dublin, Ireland. A6B1J7 1868 10 [Turn over (a) You are required to calculate to one decimal place the following accounting ratios, using the formulae provided: 1. Examiner Only Marks Remark Return on Capital Employed: Profit Before Tax Return on Capital Employed = 100% Capital Employed 2003 2004 100% 100% Return on Capital Employed % % [2] You may use this space for your calculations: 2. Net Profit Margin Profit Before Tax Net Profit Margin = 100% Sales 2003 2004 100% 100% Net Profit Margin % % [2] 1 10.06.06ML 2 15.08.06HF 3 26.10.06BP You may use this space for your calculations: A6B1J7 1868 11 [Turn over 3. Fixed Asset Turnover: Examiner Only Marks Sales Fixed Asset Turnover = Fixed Assets 2003 Fixed Asset Turnover 2004 times Remark times [2] You may use this space for your calculations: 4. Current Ratio: Current Assets Current Ratio = Current Liabilities 2003 Current Ratio 2004 times times [2] 1 10.06.06ML 2 15.08.06HF 3 26.10.06BP You may use this space for your calculations: A6B1J7 1868 12 [Turn over 5. Gearing: Examiner Only Marks Long Term Debt Gearing = 100% Capital Employed 2003 2004 Remark 100% 100% Gearing % % [2] You may use this space for your calculations: (b) Using the information above and the ratios calculated in part (a), discuss the financial position of the Viridian Group plc with respect to the following ratios: 1. the Return on Capital Employed Ratio _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ ___________________________________________________ [3] 2. the Net Profit Margin 3 26.10.06BP _____________________________________________________ _____________________________________________________ 1 10.06.06ML 2 15.08.06HF _____________________________________________________ _____________________________________________________ _____________________________________________________ ___________________________________________________ [3] A6B1J7 1868 13 [Turn over 3. the Fixed Asset Turnover Ratio Examiner Only Marks Remark _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ ___________________________________________________ [3] 4. the Current Ratio _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ ___________________________________________________ [3] 5. the Gearing Ratio _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ 3 26.10.06BP _____________________________________________________ 1 10.06.06ML 2 15.08.06HF ___________________________________________________ [3] A6B1J7 1868 14 [Turn over (c) Evaluate the usefulness of ratio analysis to analyse the final accounts of a company such as Viridian Group plc. Examiner Only Marks Remark _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ 3 26.10.06BP _________________________________________________________ 1 10.06.06ML 2 15.08.06HF _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ A6B1J7 1868 15 [Turn over _________________________________________________________ Examiner Only Marks Remark _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ 1 10.06.06ML 2 15.08.06HF 3 26.10.06BP ______________________________________________________ [16] A6B1J7 A6B1J7 1868 16 [Turn over Extra page (if needed) Examiner Only Marks Remark _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ 3 26.10.06BP _________________________________________________________ _________________________________________________________ 1 10.06.06ML 2 15.08.06HF _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ A6B1J7 1868 17 [Turn over Extra page (if needed) Examiner Only Marks Remark _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ 3 26.10.06BP _________________________________________________________ _________________________________________________________ 1 10.06.06ML 2 15.08.06HF _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ A6B1J7 1868 18 [Turn [Turn over S 6/06 700 61-006-1 [Turn over 1 10.06.06ML 2 15.08.06HF 3 26.10.06BP

Formatting page ...

Additional Info : Gce Applied Business January 2007 Assessment Unit A2 7 - Finance
Tags : gce applied business past papers, ccea gce past papers, General Certificate of Education, A Level and AS Level, uk, council for the curriculum examinations and assessment, gce exam papers, gce a level and as level exam papers , gce past questions and answer, gce past question papers, ccea gce past papers, gce ccea past papers

gce chat

Horizontal lines at:
Guest Horizontal lines at:
AutoRM Data:
Box geometries: