Page 275 - Cambridge IGCSE Business Studies

21: Income statements

ACTIVITY 21.4

Working in pairs or small groups, consider the information in the table below.

Change from last year Cause of change
Revenue increased by 4% Lower prices increased sale of toys
Cost of sales increased by 1% More raw materials were purchased
Profit increased by 5% Better control of expenses

Dividends fell by 3% To increase retained profits
Retained profits increased To finance expansion plans

Table 21.4 Comparison of Muza’s income statements over the past two years

Each item of information in the table above has been commented on by various business stakeholders. The stakeholders
and their comments are shown in the table below.

Stakeholder Stakeholder comment
Government This will increase our tax revenue.
Shareholders The reward for our investment in the business is worse than last year.

Finance Manager This is going to increase our working capital.
Trade union Our members at Muza should receive a good pay increase this year. 273
Potential investor This company might be worth investing in.

Supplier Our sales and profits have increased because of Muza’s increased sales.
Employees This information is good for our job security.
Lender The risk of Muza not being able to pay interest on borrowing is less than last year.

Customers This company is giving us better value for money than other companies.
Senior managers This will be a good source of finance for our expansion plans.
Competitors We will have to think about how we price and market our products.

Table 21.5 Stakeholders and their comments about information contained in Table 21.4

In your pairs/groups, discuss why you think stakeholders made the comments shown in the above table about the financial
data in Muza’s income statement.