Numerical Topics

Question 1

Market Share LOA (3)

Answer 1

1. Shows how much value a business has in comparison to competitors
2. If high %, gain competitive advantage over the market
3. Link to Yellow Sheet + Inc Market Share

Question 2

Productivity / Technical EOS (5)

Answer 2

1. As business grow they will make better use of machinery
2. Increase machinery will leave to increased productivity and output
3. Fixed costs of production are spread over more units
4. Lowering unit costs
5. Increase OP etc

Question 3

High ROCE (6)

Answer 3

1. Business has high ROCE
2. The business is making efficient use of capital to make a profit
3. High Profit means high return on investment for shareholders
4. Higher dividend payments
5. Becomes more attractive
6. Higher share price and able to raise more capital through selling shares

Question 4

Low ROCE (6)

Answer 4

1. Business has low ROCE
2. Not making efficient use of capital to make a profit
3. Low profitability
4. Lower return on investment for shareholders
5. May be unable to pay dividends and be less attractive
6. Lower the share price and then be unable to raise much capital via selling shares

Question 5

High Gearing - Benefit (4)

Answer 5

1. High capital is financed through debt
2. Increased Capital and can improve scale
3. Such as new machinery or factory dependant on demand
4. Link to Technical EOS

Question 6

High Gearing - Drawback (3)

Answer 6

1. Capital is financed through Debt
2. Increased Outflows for loan repayments and interest
3. Link to Liquidity

Question 7

Labour Turnover LOA (4)

Answer 7

1. Business aim to reduce labour turnover as it means
2. They will recruit a large number of new employees and train them
3. Increase cash outflows due to wages + training
4. Link to Liquidity

Question 8

Labour Retention LOA (4)

Answer 8

1. High rate of labour retention means majority of staff remain at the business
2. No need to recruit new employees or training
3. Reduce fixed costs for training
4. Link to Yellow Sheet

Question 9

Absenteeism (5)

Answer 9

1. Business want to reduce absenteeism
2. As it would mean staff are more absent over a period
3. Struggle to operate with high productivity
4. Capacity Utilisation is low
5. Fixed Cost spread over less units

Question 10

Stronger Pound - Benefit (4)

Answer 10

1. Stronger pound buys more foreign currency
2. Less pounds are needed to buy foreign currency aswell as foreign goods
3. Cheaper to import raw materials
4. Link to EOS or Profit / Lower cost of sales

Question 11

Stronger Pound - Drawback 1 (5)

Answer 11

1. Foreign currency buys less pounds
2. More foreign currency needed to buy pounds
3. Therefore goods increase
4. UK exports are dearer
5. Fall in demand - Link to Elasticity

Question 12

Stronger Pound - Drawback 2 (5)

Answer 12

1. Pound buys more foreign currency
2. Less pounds are needed to buy foreign currency and goods
3. Foreign competitors are cheaper
4. Customers switch to other imports
5. Link to PED

Question 13

Weaker Pound - Benefit 1 (5)

Answer 13

1. Foreign currency buys more pounds
2. Less foreign currency needed to buy pounds
3. Therefore price of UK goods falls
4. UK exports are cheaper
5. Rise in Demand + EOS

Question 14

Weaker Pound - Benefit 2

Answer 14

1. The pound buys less foreign currency
2. More pounds needed to buy more foreign currency and goods.
3. Foreigners unable to compete
4. Increase in demand + EOS

Question 15

Weaker Pound - Drawback (5)

Answer 15

1. Weaker pound buys less foreign currency
2. More pounds needed to buy foreign currency and goods
3. Increasing the cost of raw materials
4. Increasing cost of sales
5. Link to Elasticity due to pressure

Question 16

Moving Average - High Sales (5)

Answer 16

1. If sales are increasing - include example
2. Reinvest into capacity or stock
3. To keep up with demand
4. Increase sales volume
5. Link to EOS

Question 17

Moving Average - Low Sales

Answer 17

1. If sales are Falling - use example
2. They may try to spread risk
3. So they aren’t vulnerable to a change in trends
4. Enabling to keep up with demand
5. Keep loyalty + PED

Question 18

Critical Path - Benefit (3)

Answer 18

1. Critical path allows a business to allocate resources and ensure
2. Project runs efficiently
3. And won’t be delayed

Question 19

Critical Path - Drawback (6)

Answer 19

1. However, based off predictions
2. Unexpected change in trends - PESTLE
3. Activity may take longer
4. Disruption to project
5. Provide cash reserves to the workers as it takes longer
6. Liquidity

Question 20

High Capacity Utilisation - Benefit (3)

Answer 20

1. Increased Productivity / high differentiation
2. Increase Output / high sales volume and capacity utilisation
3. Spread Fixed cost over more units etc

Question 21

High Capacity Utilisation - Drawback (4)

Answer 21

1. Machines / Employees work over a long period
2. Ensures high levels of output /strong brand reputation
3. Increased chance of machine failure / employees are overworked
4. Increased expenses due to demotivation and production process

Question 22

Low Capacity Utilisation - Benefit - (5)

Answer 22

1. Machines / Employees don’t work over a long period
2. Due to lack of busyness meaning improving working conditions / avoid machine failure
3. Business being in slow operation means high motivation
4. Service - Deliver high customer service
5. Link to PED

Question 23

Low Capacity Utilisation - Drawback (4)

Answer 23

1. Business isn’t using all its resources
2. Lower Productivity / Output
3. Lower sales volume
4. Fixed cost spread over less units etc