CIE IGCSE Topical Past Paper 1

5.5 Analysis of accounts

0450/13/O/N/2024

RHN is a clothing retailer. It has 50 shops and 290 employees. All RHN’s employees are provided with training. Commission is used as one method of financial reward. The business often uses internal recruitment when there is a job vacancy. Last year RHN made a profit of $1.5 million. The Managing Director, as an internal user of accounts, has been analysing RHN’s statement of financial position.

((b) Identify two external users of accounts. [2]
External User 1:
External User 2:

(c) Identify four ways the information in a statement of financial position can be used. [4]
Way 1:
Way 2:
Way 3:
Way 4:

0450/11/O/N/2024

JTA is a public limited company. It sells holidays in a mass market. The business has 44 shops and 200 employees. The Finance Director is considering ways a business can increase its profit. She has been asked to analyse JTA’s financial performance using ratio analysis. An extract from JTA’s financial statements is shown in Table 3.1.

Extract from JTA’s financial statements for 2023 ($ million)
Revenue	900
Profit	100
Capital employed	800

Table 3.1

(a) Define ‘capital employed’. [2]
(b) Calculate JTA’s return on capital employed (ROCE). Show your working. [4]

045/12/M/J/2024

GTB is a business which operates in the tertiary sector. It owns 5 cafés selling food and drinks. The business uses social media as its method of promotion. The Finance Manager, Moeen, is analysing GTB’s financial statements. An extract is shown in Table 2.1. He is considering ways to improve GTB’s profit margin. Moeen knows there are other users that are interested in the accounts of a business.

Extract from GTB’s financial statements 2023
Revenue	$600 000
Profit	$150 000
Capital employed	$750 000
Profit margin	25%

Table 2.1

(b) Calculate GTB’s Return on Capital Employed (ROCE). Show your working. [4]
Working:
Final answer:

(c) Outline two ways GTB could improve its profit margin. [4]
Way 1:
Way 2:

(e) Do you think banks are the main external users of the accounts of a business? Justify your answer. [6]

045/12/F/M/2024

WFH produces hats and sells them to a mass market. It holds a high level of inventory. The Managing Director is concerned about the liquidity of the business and has been analysing WFH’s financial statements. An extract is shown in Table 2.1. The Managing Director thinks that the business might fail. Other stakeholder groups might also be interested in WFH’s financial statements.

Extract from WFH’s financial statements ($000)
	2021	2022
Current assets	60	50
Inventory	20	30
Trade receivables	25	10
Cash	15	10
Current liabilities	20	40
Profit / loss	15	(10)

Table 2.1

(b) Calculate WFH’s acid test ratio for 2022. Show your working. [4]
Working :
Final answer :

(d) Explain why the following two stakeholder groups might be interested in WFH’s financial statements. [6]
Employees:
Explanation:

Suppliers:
Explanation:

045/11/O/N/2023

ACP manufactures computers. Being ethical is important to ACP. The business employs 3000 workers in its factory. ACP imports 65% of its raw materials. As internal users of accounts, the directors plan to analyse ACP’s financial performance using profitability ratios. The Finance Director thinks making a profit is more important for a business than managing its cash flow.

(a) Identify two external users of accounts. [2]
User 1:
User 2:

(b) Identify two profitability ratios.[2]
Ratio 1:
Ratio 2: