Azrina has a small shop in a busy main street. She sells souvenirs to tourists. She has been told by her bank manager that she needs to improve her rate of turnover and to reduce her expenses because her net profit is too low.

Mark scheme

Marking points from the official mark scheme (May/June 2013). The mark or mark type is shown in brackets.

1. [2] (a) (i) Any two points × 1 mark each or one well explained point × 2 marks –
2. the number of times that the average stock held is sold each year. (2)
3. it is a measure of how quickly the goods are sold over a period of time
4. rate of turnover varies from business to business/example
5. calculated by cost of goods sold divided by average stock at cost price OR
6. value of sales divided by average stock at selling price
7. any other relevant point
8. [2] (a) (ii) Any two points × 1 mark each –
9. the actual profit made by the business
10. calculated by subtracting expenses from gross profit
11. tax may be paid out of net profit
12. any other relevant point
13. [4] (b) (i) Any four points × 1 mark each or two well explained points × 2 marks each –
14. negotiate better terms with suppliers so that the cost of goods sold is less
15. try not to hold too much stock as working capital will be tied up in unsold stock
16. and this unsold stock may become damaged or out of date
17. advertise more to sell more stock
18. purchase souvenirs more carefully so that goods that are likely to sell are stocked
19. any other relevant point
20. [4] (b) (ii) Any four points × 1 mark each or two well explained points × 2 marks each –
21. increase turnover by better advertising/offering promotions
22. improve gross profit by increasing turnover/reducing the cost of goods sold
23. reduce expenses by reducing wastage/cutting the wage bill/finding cheaper premises
24. reduce the cost of goods sold by buying in greater bulk/looking for cheaper suppliers
25. increase prices and so possibly increase revenue
26. decrease prices in order to sell more
27. any other relevant point
28. [2] (c) Any two points × 1 mark each or one well explained point × 2 marks –
29. because she is likely to have many financial transactions
30. and needs to be able to check on her financial position
31. and see how much she is paying out and receiving
32. and see her up-to-date financial position
33. any other relevant point
34. [6] (d) Level 2 (4-6 marks) Has discussed both Internet banking and using a bank branch in relating to Azrina's business and has given a reasoned opinion. (If a candidate discussing only Internet banking, award 4 marks max.) Azrina probably uses Internet banking because it saves her time and she can use it at any time she likes. She is able to carry out a variety of functions such as making payments, transferring money between accounts and obtaining up-to-date information about the balances in her accounts. She is able to do this when it suits her, perhaps when her shop is closed, rather than going to the bank during opening hours. On the other hand, Azrina is not able to carry out all her banking requirements using the Internet. She will have her takings from the shop – probably quite a lot of cash as she is selling to tourists and this will need to be paid in at the bank branch. She also needs to have a float in cash of small denominations and this she can obtain at the bank. She may be able to apply for loans and overdrafts online but if she wants to have detailed advice on finance and investment, she is probably better advised to meet a bank official at her local branch. Azrina already has an Internet bank account so she must be finding this better than going to the bank branch at frequent intervals. She will, however, need to use the bank branch for certain functions that cannot be done online. Level 1 (1-3 marks) Has commented on Internet banking and/or using a bank branch with/without an opinion. Internet banking provides banking services 24/7. Customers can pay bills and make transfers. They cannot get cash from their computers. They can find out how much they have in their bank accounts. They cannot pay in money.