Page 283 - Cambridge IGCSE Business Studies

22: Balance sheets

1 What is the balance sheet value of the amount owed to JB Plastics?
2 What is the balance sheet total of the amount JB Plastics owes to its suppliers?
3 Why do you think JB Plastics has non-current liabilities of $50,000?
4 What is another name for ‘net current assets’?
5 What is the balance sheet value of all of the assets that are owned by JB Plastics which it expects to use for more than
one year?
6 Why might the balance sheet value of non-current assets not be the same as their market value?
7 What is meant by the term ‘equity capital’?
8 Why do businesses such as JB Plastics retain some of their profit?
9 What is the name of the tax paid by businesses such as JB Plastics Ltd?
10 Who does the business owe ‘dividends’ to?

TEST YOURSELF
1 How does the balance sheet provide users with information about how a business
is being financed?
2 Explain why a balance sheet prepared six months ago may not show the business’s
current financial position.
3 Explain why the retained profit figure shown on a business’s most recent balance
sheet may be lower than on the previous year’s balance sheet.

CASE STUDY Maldives Hotels Company 281

The following financial data has been extracted from the balance sheets of the Maldives Hotels Company (MHC) for

2011 and 2012.
$m $m $m $m
2012 2011

Non-current assets 3,622 3,026

Current assets 1,836 1,822
Current liabilities 2,006 1,344
Net current assets (–170) 478
Total assets 3,452 3,504

Shareholders’ equity (funds)
Share capital 200 200
Retained profi t 3,090 2,966

Non-current liabilities 162 338
Capital employed 3,452 3,504

TASK
a What is meant by ‘non-current liabilities’?
b Calculate the percentage increase in MHC’s retained profit between 2011 and 2012.
c Identify and explain the reasons for any three changes that have taken place on MHC’s balance sheet between 2011
and 2012.
d Why is retained profit important to MHC?