O-LevelCommerceFinance7100/22 · May/June 2017 · Q320 Marks

Fig. 2 gives a summary of the financial situation of two large-scale retail shop chains. Y Shops Ltd C Retail Ltd $ million $ million Sales 60 30 Net Profit 7 9 Working Capital 3 4 Long-term Liabilities 12 9 Share Capital and Reserves 28 25 [Figure 2.0] Use Fig. 2 to help you answer the following questions.

(a)(i)State one example of a long-term liability.[1]
(a)(ii)Explain what is meant by working capital.[2]
(a)(iii)Why is working capital important to any business?[3]
(b)Compare the financial position of Y Shops Ltd and C Retail Ltd. Which of these two businesses is in a better financial position? Give reasons for your answer.[6]
(c)Both businesses own and manage a number of retail shops. Describe two advantages of retailing on a large-scale.[4]
(d)Y Shops Ltd and C Retail Ltd have shops in many towns where there are also small independent retailers. Describe two actions a single shop retailer can take to survive this competition.[4]

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Mark scheme

Marking points from the official mark scheme (May/June 2017). The mark or mark type is shown in brackets.

[1]
[2] Up to 2 marks for a full explanation.
[3] Up to 3 marks for a full explanation, or 3 × 1 mark.
[6] Level 2 (4–6 marks) Has discussed the statement and evaluated the financial position of both shops.
[6] Level 1 (1–3 marks) Has commented on the statement Note: No marks for simply restating figures given in Fig. 2.
[4] Up to 2 marks for each advantage described.
[4] 1 mark for each action given up to a maximum of two actions, plus 1 mark given for a description of each action.

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