Business Finance (Cambridge (CIE) IGCSE Business)

PJA make fashion clothing for 16-25 year olds. Many of its competitors are multinational companies. PJA produce new products every 3 weeks. All PJA’s products are made in a local factory because of import quotas. The Managing Director is reviewing PJA’s financial statements using ratio analysis. An extract is shown in the table below.

SBG makes a range of products including specialist paints. It has 6 factories and 700 employees. All SBG’s employees are encouraged to be involved in decision-making. SBG’s products are exported to 16 countries using wholesalers as its main channel of distribution. The Managing Director said: ‘Our objectives are to grow and make a profit.’ He also recognises that all business activity creates externalities for SBG’s stakeholder groups.

Kemala makes high-quality beauty products. Demand for her best-selling hand cream is price inelastic. She advertises her products in specialist beauty magazines. Kemala is analysing her income statement. An extract is shown in the table below. She said: ‘When I started my business, I did not understand why cash is important’.

Following the end of a recession in country X, Beena wants to start up a hairdressing business. One option is to purchase a franchise from an established hairdressing business. Beena has $800 in savings and knows having enough working capital will be important for her business. She plans to use market research to help her decision-making. Beena knows there are many ways to segment a market.

CPF is a clothing retailer. It is a private limited company. It has 4 shops and 30 employees. The Finance Director is concerned about the amount of current assets because working capital is important. The amount of retained profit is also low. CPF’s directors are planning to expand the business by opening a new shop. A suitable source of long-term finance will need to be identified. The plan to expand will affect many of CPF’s stakeholder groups.

TFN is a travel business which sells holidays. It has 37 shops and 1000 employees. Last year TFN’s profit increased to $46 million. The Managing Director knows that good customer service has helped maintain customer loyalty. He said: ‘TFN’s managers use ideas from Herzberg’s two-factor theory to help motivate employees. All employees are provided with off-the-job training and each manager has a wide span of control.’

Izaak owns a small fish restaurant. He employs two chefs (cooks) and three workers who serve in the restaurant.

Izaak has been trying to increase added value to improve profits. Izaak has been looking at the financial performance of his business. An extract is shown in the table below. Izaak has received a number of complaints about food and service. He knows he must improve quality but cannot decide on the best way to do this.

Extract from income statements ($000)