Business 7115 · O Level · 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 reviewing BVC’s cash-flow forecast in Table 2. He stated: ‘Success is not just about our return on capital employed.’ The Managing Director is concerned about the arrival of new legal controls to safeguard the environment. This would require BVC to cut down the number of chemicals used in paint production. He believes these new legal controls will harm the business.
(a)[2]
What does the term ‘return on capital employed’ mean?
(b)[2]
Calculate the values of X and Y below.
(c)[4]
Identify and explain two reasons why a cash flow forecast could matter to BVC.
(d)[6]
Identify and explain two possible difficulties for BVC when exporting its products.
(e)[6]
The Managing Director believes the new legal controls to protect the environment will be bad for 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 how much profit is earned for each dollar invested” …