Year 12s: what will be the first way you research your future options? >>

OCR Business Studies F297 2016 - VGL Case Study

Scroll to see replies

When answering 'what impact would a diversification into textiles have on VGL's Stakeholders' how would you get evaluative skills in there? And would you only speak about the impact on them or include VGL too?

Reply 101

Examsarestress

Original post by Lewis7_

It'll either be ratios or TSA - As TSA has apparently not came up before, its quite likely it will.

Yeh TSA has not come up before the only reason i say decision trees also is because the case studies talks about decision trees.

Reply 102

GFEFC1

Original post by Examsarestress

Is that a no to decision trees?
what do you think then?

I honestly think any ratios can come up and TSA although i have not looked at TSA yet. (just gonna refresh myself tomorrow on the technique to answer it)

Reply 103

Examsarestress

Original post by GFEFC1

I honestly think any ratios can come up and TSA although i have not looked at TSA yet. (just gonna refresh myself tomorrow on the technique to answer it)

Yeh good idea! whats capital employed on a balance sheet?]

Reply 104

Lewis7_

Original post by Examsarestress

Yeh good idea! whats capital employed on a balance sheet?]

Creditors falling due after one year + Equity Shareholder funds = Capital Employed

(Thats what i have down anyway.)

(edited 7 years ago)

Reply 105

Tom7029

Original post by Examsarestress

Yeh good idea! whats capital employed on a balance sheet?]

Capital employed = Net assets employed + long term liabilities (in this case 'creditors falling due after one year').

Reply 106

Tom7029

Original post by Lewis7_

Creditors falling due after one year + Equity Shareholder Funds = Capital Employed

(Thats what i have down anyway.)

This is also correct as Net assets employed and equity shareholders' funds have to balance (hence balance sheet).

Reply 107

alevel0620

Hello can someone explain to me how to get the break even point for the table 4 textile part ?

Reply 108

GFEFC1

Took me a good few hours to figure out CA haha. In what questions should we recommend/advise not to do something? I feel like in most questions i can advise them on doing something but not sure if i would even get marks?

Reply 109

GFEFC1

Original post by alevel0620

Hello can someone explain to me how to get the break even point for the table 4 textile part ?

I really don't understand the maths to the diversification part. Michael suggests they need 200 tonnes processed each week... does this mean that they buy 200 tonnes of material and sell the 200 tonnes as clothing etc per week?

Reply 110

Lewis7_

Original post by alevel0620

Hello can someone explain to me how to get the break even point for the table 4 textile part ?

We went through this as an example in class before, Not sure how helpful it is for you.

http://i.imgur.com/7O3ur3y.jpg

(Link for big pic)

(It says £3.990,000 profit a week at the bottom)

(edited 7 years ago)

Reply 111

Lewis7_

Original post by GFEFC1

Michaels guess of 200 tonnes processed is a terrible assumption by him, he means they need to PROCESS 200 tonnes of collected textiles a week (and then sell it off.)

Going off the whole "4 new workers" thing aswell, it assumes that is like 50 tonnes per worker, which way too much. (See my above reply with the profitability assumptions)

(edited 7 years ago)

Reply 112

alevel0620

Original post by ShaminiPamini

Capital employed is creditors falling due after one year added to net assets employed

so for 2015 it is £109 million
(don't treat the creditors as a negative when adding it)

I thought capital employed are net asset employed?

Reply 113

milutin767

Could anyone explain liqudity ratio???

Reply 114

alevel0620

Original post by GFEFC1

hi, did you get;

2014= 2.52%
2015 = 5.87%

How did you get these ? Is this the ROCE? operating profit / capital employed x 100?

Reply 115

alevel0620

Do you guys think the solvency ratios will be in the questions? How do you work out the gearing ? Long term loans/ capital employed x100% so what is the figures for long term loans? thanks

Reply 116

ShaminiPamini

Original post by alevel0620

How did you get these ? Is this the ROCE? operating profit / capital employed x 100?

You don't use operating profit, you use PBIT

Add profit before taxation to interest...

You need to add in the Long Term Liabilities to net assets employed to get total capital employed

Reply 117

ShaminiPamini

Original post by alevel0620

Do you guys think the solvency ratios will be in the questions? How do you work out the gearing ? Long term loans/ capital employed x100% so what is the figures for long term loans? thanks

creditors falling due after one year

Reply 118

ShaminiPamini

Original post by milutin767

Could anyone explain liqudity ratio???

Reply 119

Tom7029

Original post by ShaminiPamini

You don't use operating profit, you use PBIT

Add profit before taxation to interest...

You need to add in the Long Term Liabilities to net assets employed to get total capital employed

Alternatively you could use operating profit but you have to minus depreciation. This is the same as profit before taxation + interest. So your calculation would look like this:

2015: (12.2 - 5.8 / 109) x 100

Both are the same, which ever is easiest.