3 (a) Explain two reasons why the cash-flow forecast in Appendix 3 is important to TT. Reason 1: Explanation: Reason 2: Explanation:

Mark scheme

Marking points from the official mark scheme (May/June 2021). The mark or mark type is shown in brackets.

1. [1] Reason: To see if there is a cash flow problem / liquidity problem.
2. [1] Explanation of reason: If so, he needs to organise an overdraft – the cash-flow forecast will help support Tandeep persuading the bank to give an overdraft / bank loan. (Other ways of solving a cash flow problem might be given, e.g. apply for trade credit).
3. [1] Reason: To see if there is sufficient cash / working capital to pay day-to-day costs.
4. [1] Explanation of reason: So, TT can pay expenses – without the need for additional working capital.
5. [1] Reason: Whether the company is holding too much cash.
6. [1] Explanation of reason: Perhaps there may be better uses of the cash – that may yield a greater return on the capital.
7. [1] Reason: May help with decisions/planning about when to purchase assets/equipment/inventory.
8. [1] Reason: Help to sell shares to new investors.
9. [1] Reason: Can be used to compare financial performance, against actual performance over time (e.g. sales).
10. [1] Reason: Can be used to help apply for a bank loan.
11. [1] Job description (Helpfulness): Outlines the duties of the job – sets out clearly what the toy shop manager will be expected to do.
12. [1] Job description (Helpfulness): More likely to get suitable applicants as they will know what is required of them and if they will be able to carry out the necessary tasks.
13. [1] Job description (Helpfulness): Makes it clear what the applicant should be able to do if they cannot do these tasks necessary to manage the toy shop then they should not apply for the job.
14. [1] Job description (Helpfulness): Helps to ensure only suitable people apply for the job as they are clear about the roles and responsibilities of the position.
15. [1] Job specification (Helpfulness): Makes it clear what qualifications, experience and skills are required for the job.
16. [1] Job specification (Helpfulness): Makes it easier for Tandeep to decide between candidates as to who may be most suitable for the manager of the toy shop – as qualifications, skills, personal qualities and experience are listed.
17. [1] Job specification (Helpfulness): Easier for candidates to see if they could do the job and therefore decide whether to apply for the job – people without the necessary qualifications should not apply – less time is wasted reading through applications that are not suitable.
18. [1] Job specification (Helpfulness): Easier when shortlisting applicants for interview to select the most suitable people.
19. [1] Shortlisting (Helpfulness): Selects the most suitable applicants to interview so less time wasted with unsuitable people for the job of manager of the toy shop.
20. [1] Shortlisting (Helpfulness): May use references to help shortlist applicants to remove unsuitable people even though the application form may make the person seem most suitable.
21. [1] Conclusion (Job description): A job description makes it clear what the job requires and therefore it is easier for Tandeep to know what tasks in the toy shop he wants the applicant to be able to do. It is no good shortlisting unsuitable applicants and the job specification only lists skills and qualifications but does not give details of the job of manager of the toy shop. Therefore, a job description is the most important.
22. [1] Conclusion (Job specification): A job specification is most important as it makes it clear what qualifications, experience and skills are required to be the manager of the toy shop. Without this an unsuitable person may be recruited and someone without the necessary experience could not do the job.
23. [1] Conclusion (Shortlisting): Without shortlisting Tandeep could waste a lot of time interviewing unsuitable applicants for the job of manager when they may not know anything about toy shops.