Business 7115 · O Level · Statement of financial position

Statement of financial position — practice question

HRO makes children’s toys. It is a private limited company. The chief aim of HRO’s shareholders is to raise profit. This could clash with the aims of other stakeholder groups, including its 30 suppliers. HRO’s Managing Director understands that market research can support marketing decisions. The Finance Director is compiling HRO’s statement of financial position. An extract appears in Table 3.1.
(a)[2]

Define the term ‘non-current assets’.

(b)[2]

Calculate HRO’s current ratio, showing your working.

(c)[4]

State, for each of the following, whether it is a current asset or a current liability: Trade receivables. Trade payables. Overdraft. Inventory.

(d)[6]

Explain one way in which HRO’s shareholders’ objective of increasing profit may conflict with the objectives of each of the following stakeholder groups: Customers. Suppliers.

(e)[6]

Do you think the benefits to a business of using primary market research are greater than the drawbacks? Justify your answer.

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