ACP is a computer manufacturer. Ethical behaviour matters to ACP. The business has 3000 employees in its factory. ACP brings in 65% of its raw materials from abroad. As internal users of the accounts, the directors intend to examine ACP’s financial performance by using profitability ratios. The Finance Director believes that earning a profit is more important for a business than controlling its cash flow.
(a)[2]
Identify two outside users of accounts.
(b)[2]
Identify any two profitability ratios.
(c)[4]
Outline two likely reasons ACP imports its raw materials.
(d)[6]
Explain one benefit and one limitation for ACP of being ethical.
(e)[6]
Do you think making a profit matters more for a business than managing its cash flow? 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: “Banks or lenders” …