CLN is a public limited company. It sells a variety of electrical products, including televisions and computers. The Managing Director has been examining CLN’s accounts. An extract appears in Table 3.1. He stated: ‘We need more finance. Last year CLN made a loss of $250m. I blame increased competition from e-commerce.’ CLN intends to shut 30 of its 120 shops. This choice will affect many stakeholders, including the local communities. The number of sales made by each shop will be used to choose which shops are closed.
(a)[2]
Define ‘non-current assets’.
(b)[2]
Calculate the acid test ratio. Show your working.
(c)[4]
State four factors that may influence the source of finance a business uses.
(d)[6]
Explain two ways in which local communities may be affected by CLN’s decision to close some of its shops.
(e)[6]
Do you think the number of sales from each shop is the best method for a retail business to use when deciding which shops to close? Justify your answer.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Resources owned by a business used for more than one year” …