Business 0450 · IGCSE · Statement of financial position
Statement of financial position — practice question
CLW produces wood furniture, such as chairs and tables. Demand has grown rapidly during the last 3 years, so the business must expand production capacity at its factory. The factory is situated close to the city centre in a district with low unemployment. The Finance Director has prepared a business plan, which includes a balance sheet. The Finance Director is satisfied with CLW’s liquidity.
(a)[2]
What does the term ‘business plan’ mean?
(b)[2]
What does the term ‘balance sheet’ mean?
(c)[4]
Identify and explain two possible advantages for CLW of keeping stock levels high.
(d)[6]
Identify and explain two factors, other than finance, that CLW’s management must take into account when expanding production scale.
(e)[6]
Do you think the Finance Director is correct to be pleased with CLW’s liquidity in 2014? Support your answer with the figures in Table 1 and suitable ratios.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “A document that lists objectives and explains how the business will reach them” …