ACP makes computers. Ethical conduct matters to ACP. The business has 3000 workers in its factory. ACP sources 65% of its raw materials from abroad. As internal users of accounts, the directors plan to assess ACP’s financial performance by using profitability ratios. The Finance Director believes that generating profit is more important for a business than controlling its cash flow.
(a)[2]
Identify any two external users of accounts.
(b)[2]
Identify any two profitability ratios.
(c)[4]
Outline two plausible reasons why ACP imports its raw materials.
(d)[6]
Explain one benefit and one limitation for ACP of acting ethically.
(e)[6]
Do you think earning a profit matters more to a business than controlling 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” …