Table 2: Financial Data (from insert) Revenue 2017 (actual): 550 2018 (forecast): 580 Operating profit 2017 (actual): 56 2018 (forecast): 60 Share price 2017 (actual): $4 per share 2018 (forecast): $3.80 per share Dividend per share 2017 (actual): $0.30 per share 2018 (forecast): $0.28 per share Retained profit 2017 (actual): 10 2018 (forecast): 12

Mark scheme

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

1. [1 mark] Dividend yield = (dividend per share/share price) × 100
2. [2 marks] Dividend yield 2017: 0.30/4 × 100 = 7.5%
3. [2 marks] Dividend yield forecast 2018: 0.28/3.80 × 100 = 7.37%
4. [6 marks] Change in yield: 7.37 – 7.5 – = – 0.13% (or 0.13/7.5 × 100 = 1.73%)
5. Accept 7.36% therefore -0.14% (6)
6. Accept answer as decimal i.e. 0.0737 (2), 0.075 (2) and 0.0013 (6) etc.
7. Shareholders as owners of the plc are interested in share prices and return on shares, so dividend yield is important
8. Use of figures/ratios calculated from the data, e.g. change in profit margin
9. Detail of possible expansion plans into men's products/salons in hotels
10. Share price is predicted to fall, sell before it falls further?
11. Dividend yield is predicted to fall (but not significantly)
12. Shareholder nervousness about future of company
13. Recent fall in profit and dividends
14. Profit margin is forecast to increase (10.2% to 10.3%)
15. Interest rates still low so worse returns from banks
16. Company expansion plans announced at AGM may be promising
17. Strong track record of increasing dividend
18. Commitment to CSR could be important to some investors
19. Share price fall decreases value of investment, may be reason to sell
20. Dividend yield is not changing significantly, so returns may still be acceptable to some investors
21. Long term view – company success in future potentially helped by new growth plans.
22. Decision either way – sell or not
23. How well has Mary communicated the company's expansion plans?
24. Are shareholders in it for the long term or short term?
25. Main factor for shareholders holding shares? Return or ethical considerations
26. How are other investments performing?