JTA is a public limited company that sells holidays to a mass market. It operates 44 shops and employs 200 people. The Finance Director is looking at ways in which a business can increase profit, and she has been asked to assess JTA’s financial performance by using ratio analysis. Table 3.1 contains an extract from JTA’s financial statements.
(a)[2]
Define the term ‘capital employed’.
(b)[2]
Calculate JTA’s return on capital employed (ROCE). Show how you worked it out.
(c)[4]
Outline two advantages to JTA of selling in a mass market.
(d)[6]
Explain one advantage and one disadvantage of JTA operating as a public limited company.
(e)[6]
Do you think raising prices is the best method for a business to increase its profit? 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: “Total value of long-term finance invested in a business” …