Refer to Table 3.

Mark scheme

Marking points from the official mark scheme (May/June 2018). The mark or mark type is shown in brackets.

1. [1] (a)(i) Share price/earnings per share
2. [2] (a)(i) $20/$1.5
3. [3] (a)(i) = 13.3 OFR
4. [1] (a)(ii) Dividend per share/share price × 100
5. [2] (a)(ii) 60cents/$20
6. [3] (a)(ii) = 3% OFR
7. [Knowledge] (b) ROCE - increase profit without increase CE
8. [Knowledge] (b) Dividend yield – increase dividends paid
9. [Knowledge] (b) Increase price
10. [Knowledge] (b) Cut capital employed e.g. sell assets and repay some debt
11. [Application] (b) Cutting management overheads through delayering might increase profit
12. [Application] (b) Higher prices (relatively) already being charged
13. [Application] (b) Transport outsourcing should raise cash from sale of assets.
14. [Analysis and Evaluation] (b) Raise prices – might increase profit margins, if prices rise more than costs, and RoCE – BUT demand is price elastic for products which are not easy to brand. Might work for specialist oils?
15. [Analysis and Evaluation] (b) Sale of assets/cut loans – will also cut gearing – BUT impact on operations of assets sales? Might refer back to closing transport depot. Non-current liabilities needed for PGP expansion programme and is the gearing ratio that high anyway?
16. [Analysis and Evaluation] (b) Increase dividends to improve dividend yield and share price (raising the PE ratio). BUT will this reduce retained earnings and will this restrict the future expansion plans and the dividends and share price in the future?
17. [Analysis and Evaluation] (b) ARA