Finance

calculate the gross profit margin

(GP/TR=GPM) 400-120/400x100=70%

Price hotel would normally charge

2200+1850=4050

calculate the return on capital employed

35/300x100=11.66

share capital- venture capital

- Venture capital is financing that investors provide to startup companies which have long-term growth potential - For startups without access to capital markets, venture capital is an essential source of money - Risk is high for investors but - venture capitalists get a say in decisions

4. Calculate the new number of computers that would need to be manufactured and sold at the current price for Informatics to make a profit of $2,000,000 from both the Pakistani and Indian markets combined, if the Board of Directors decided to proceed with the expansion into India

100x-(100,000+1000x x 0.8)=2,000,000 1000x-(100,000+800x)=2,000,000 200x=2,100,000 x=10500 units

iii. Calculate the net profit if 4000 computers are sold

4,000,000-(100,000+3,200,000)=700,000

Profit hotel would normally make at its normal price

4050-2200=1850

cr

500

debt to equity ratio

6/13

3. Calculate the annual depreciation expense of the car (4)

Initial price: 30,000- capital invested in car 4 years it will be worth 10,000 20,000 for 4 years IC: 5,000 per year -416 per month 30,000-416 (per month on income statement)

liquidity

Liabilities- assets 140-140=0

2. Outline two possible sources of long-term finance available to easyJet

Long-term: refers to any period after the next five years share capital (incl. venture capital and business angels) Debentures Prefered shares

calculate the net profit margin

Net profit divided by total revenue (NP/TR=NPM) 35/400=0.075

income statement

Sales revenue: 60,000x12: 720,000 Costs: 39000 Gross profit: 720,000-39,000: 681,000 Fixed costst: 150,00 x12: 180,000 Net profit: 681,000-180,000: 501,000

Liquidity

The ability of a firm to be able to pay its short-term debts

ii. Calculate the margin of safety in units

amount by which sales level of output exceeds the break-even level of output 4000-12.5=3,987.5

i. Calculate the break-even quantity in units

break even point= FC/(P-VC) 100,000/(4000X1000)-3,200,000) =100,000/800,000 =0.125X100=12.5

Working capital

current assets - current liabilities

disadvantages of preferred shares

do not have voting rights in companies and their administrative decisions

preferred shares

shares which are held by shareholders which yield a fixed amount of dividends from a companies profits

Explain why an expansion in easyJet's passenger numbers has increased the need for short-term and long-term finance

short term: refers to business or personal loans that have a shorter-than-average timespan for repaying the loan, typically one year or less - increase on revenue expenditure: Spending on the day-to-day running of a business (e.g. rent, wages and utility bills) - Must hire more people- must finance their payroll - Raw materials- food, new uniforms long term: - Capital raised from the share issue is earmarked to support the purchase of new aircraft as part of the group's plans for a rapid expansion during the next few years" ---> increased the need for long term finance on capital expenditure-- machinery - Maintenance facility

Debentures

type of long-term loan to a business with the promise of a fixed annual interest payment - debenture holders DO NOT have voting rights on how the business is run +provides good long-term finance without losing control of the business + they receive annual benefits regardless of whether or not the business is making money - increased amount of long-term liabilities raising the amount of interest payments to the lenders

advantages of preferred shares

yield a fixed amount given out before Ordinary Share dividends are handed out preferred Shares will have a general idea of the amount they will receive every year cumulative payment, which allowed shareholders to get twice the dividend payments in two years if the first year did not yield extremely positive results have a steady source of profit