Page 299 - Cambridge IGCSE Business Studies

Exam-style case study

1 a Identify and explain how any two external Consideration of share issue:
stakeholders of the Paradise Group might use the
Consideration of long-term bank loan:
fi nancial data provided in the text and Appendix 2.
Recommendation:
Stakeholder 1:
[12]
Explanation:
3 a Identify and explain two ways the company’s
Stakeholder 2: accountant, Eve Wan, might use the cash-fl ow
Explanation: forecast she has prepared to better manage
the Paradise Group’s cash position.
[8]
Use 1:
b Refer to Appendix 1. Do you think the Finance
Director is right to be concerned about the Explanation:
performance of the Hideaway? Justify your
Use 2:
answer. You must calculate at least
two appropriate ratios. Explanation:
[8]
Ratio 1:
b Do you agree with Winston Stanley’s view that
Calculation:
‘Profi t is what our business is all about and this
Ratio 2: has been increasing year on year for the past
297
Calculation: fi ve years, so there is nothing to worry about.’?
Justify your answer. [12]
Justifi cation:
4 a Identify and explain two reasons why profi t is
[12]
important to the Paradise Group.
2 a Using examples, identify and explain the
Reason 1:
difference between non-current assets
and current assets that might be held Explanation:
by the Paradise Group of Hotels. Reason 2:
Non-current asset example: Explanation:

Explanation: [8]
Current asset example: b How useful will the latest income statement
and balance sheet of City Budget Hotels have
Explanation:
been to the Paradise Group’s Board of Directors
[8] when making the decision to buy the two hotels

b Consider the advantages and disadvantages of in Country Z? Justify your answer. [12]
using a share issue or long-term bank loan to
fi nance the purchase of the City Budget Hotels Total available marks 80
and recommend to the Board of Directors which
source it should use. Justify your answer.