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