Business 0450 · IGCSE · Cash-flow forecasting and working capital
Cash-flow forecasting and working capital — practice question
BVC produces a variety of paints. It sells 60% of its output overseas. The Managing Director has been examining BVC’s cash-flow forecast in Table 2. He commented: ‘Success is not just about our return on capital employed.’ He is concerned about the arrival of new legal controls designed to protect the environment. As a result, BVC would need to use fewer chemicals in the production of paint. He believes these new legal controls would be bad for business.
(a)[2]
What does the term ‘return on capital employed’ mean?
(b)[2]
Work out the following values:\n\nX:\n\nY:
(c)[4]
Identify and explain two reasons why BVC might need a cash flow forecast.
(d)[6]
Identify and explain two possible difficulties BVC may face when exporting its products.
(e)[6]
The Managing Director thinks the new legal controls to protect the environment will harm the business. Do you agree? 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: “Shows the profit earned for each dollar invested” …