OCR Business Studies F297 2016 - VGL Case Study

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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

http://www.tutor2u.net/business/reference/return-on-capital-employed
but it said operating profit here... Im confused :frown:

((

Reply 121

beccamarie_98

Well the SWOT question would most likely be in relation to VGLs objectives.

S - Substantial increase in net profit due to an increase in revenue and reduction in costs --> increases the chances of VGL being able to borrow money to diverse into the textiles market --> diversification will assist in achieving O1 (increase revenue by 6%)

W - Absence of labour turnover rates for each site --> difficulty in identifying problems --> limits their ability to achieve O3 (keep labour turnover below 10%)

O - Increasing UK population --> increased amount of household waste --> increased demand for collection services (from the council) --> helps with the achievement of obtaining two more local authority contracts

T - Greater environmental awareness --> less packaging to process and sell on the spot market --> could negatively impact O1 ---> could be overcome through extra training --> minimise contamination so that products can achieve their full potential revenue --> questions the extent to which a greater environmental awareness will impact O1

P.S. Sorry for how brief this is! You will need make sure to expand these points and make it all relevant to the case study. Context is key!

Original post by GFEFC1

Hi, how would you go about answering a SWOT question?

Reply 122

beccamarie_98

TSA has come up before but not for a while. TSA would be the most logical question to give us though

Original post by Lewis7_

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

Reply 123

beccamarie_98

To get evaluation you will need to weigh up which stakeholder diversification will impact the most and why.

You could talk about the impact diversification could have on VGLs employees and managers but I wouldn't talk about the business as a whole as the link to the question is stakeholders.

Original post by GFEFC1

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 124

ShaminiPamini

Original post by alevel0620

http://www.tutor2u.net/business/reference/return-on-capital-employed
but it said operating profit here... Im confused :frown:

((

OCR has their own spec and it says use PBIT

Reply 125

milutin767

Original post by ShaminiPamini

thank you sooo much!

Reply 126

alevel0620

Original post by ShaminiPamini

OCR has their own spec and it says use PBIT

thank you !!

Reply 127

GFEFC1

I have memorised all the ratio formulas, but I am unsure on what category they come under e.g what ratios are in activity ratios? Can some tell me them?

Reply 128

ga7798

Original post by GFEFC1

I have memorised all the ratio formulas, but I am unsure on what category they come under e.g what ratios are in activity ratios? Can some tell me them?

Activity:
Stock turnover
Fixed asset turnover
Debtor turnover
Creditor turnover

I just remember it as being all the turnovers (how many times the business does something)

Have a look at this: http://www.ocr.org.uk/Images/78299-unit-f292-and-f297-guidance-on-accounting-elements.pdf

It's all the formulas you need to know and has all their categories

(edited 7 years ago)

Reply 129

alevel0620

Can someone check my ratios ? I don't know whether did I do it in the right way... feel free to correct me ! many thanks !

#GPM: 2014 is 34.88%, 2015 is 49%
#NPM: 2014 is 4.65%, 2015 is 14.55%
#ROCE: 2014 is 2.52% , 2015 is 5.87%
#ROE: 2014 is 2.91%, 2015 is 10%

#Current ratios : 2014 is 88:1 , 2015 is 1.57:1
#Acid test: 2014 is 1:1 and 2015 is 0.57:1

#earning per share : 2014 is 0.35 and 2015 is 1.2
# earning ratio : 2014 is 2.86 and 2015 is 0.83
# Dividend per share: 2014 is 7.5 and 2015 is 95
#Dividend yield : 2014 is 750 and 2015 is 9500 (not sure)

#Asset turnover: 2014 is 0.31times and 2015 is 0.33times
#Stock turnover : 2014 is 1.3times and 2015 is 1.2 times
#Debtor days : 2014 is 84.88 days and 2015 is 44.24 days
#Crediotors days : 2014 is 316.58days and 2015 is 304.17days

Gearing : 2014 is 57% and 2015 is 55%
Interest cover: I don't know how to do, pls help

Plus I'm not sure what unit to put on the shareholder ratios.

Feel free to correct me !! thanks !

Reply 130

Lewis7_

-snip- formatting error

Reply 131

Lewis7_

Original post by alevel0620

If you cant read anything, feel free to ask!

Large image!
http://i.imgur.com/qGhhMyO.jpg

All of this is from the APT pack/Classroom

Reply 132

alevel0620

Original post by Lewis7_

If you cant read anything, feel free to ask!

Large image!
http://i.imgur.com/qGhhMyO.jpg

All of this is from the APT pack/Classroom

How did you do the interest cover?
Also do you think there will be any economic/finance questions that will come up?
Thanks !

Reply 133

alevel0620

Original post by Lewis7_

If you cant read anything, feel free to ask!

Large image!
http://i.imgur.com/qGhhMyO.jpg

All of this is from the APT pack/Classroom

Im confused with the net profit margin.. is it net profit/ sales revenue x100? or something do with operating profit? I got different answer as yours..

Reply 134

Lewis7_

Original post by alevel0620

How did you do the interest cover?
Also do you think there will be any economic/finance questions that will come up?
Thanks !

Original post by alevel0620

Im confused with the net profit margin.. is it net profit/ sales revenue x100? or something do with operating profit? I got different answer as yours..

Interest cover was
(Operating Profit - Depreciation) / Interest

Interest cover: 2014 is 2.15times, 2015 is 5.33times

NPM was
Net(Operating) Profit / Sales revenue x 100

NPM: 2014 is 21.59%, 2015 is 36.96%

If any economy questions come up, it'll be linked to the calculations i think. (And hope. haha.)

Reply 135

alevel0620

Original post by Lewis7_

Sorry to ask too much.. but can you explain what point would you write about these two questions... struggling...
"How inflation affect to achieve objectives ?"
"How 4Ps affect the ability to achieve objectives"
Thank you

Reply 136

GFEFC1

Original post by Lewis7_

Isn't VGL's NP 1.4m and 4.8m?

Reply 137

Lewis7_

Original post by GFEFC1

Isn't VGL's NP 1.4m and 4.8m?

That is correct, but the pack I used, was Operating Profit Margin, so i used operating profit. Effectively the same result. (sort of.)

Reply 138

Lewis7_

Original post by alevel0620

I have no idea why the 4P's would ever be involved in a strategy paper.. haven't practiced for that question.

I will do a plan for inflation tomorrow and tell you what I get, as I have not done it yet. (yay for last minute cramming!)

But all I can think of right off the top of my head, is about how inflation would effect the prices for VGL selling the recclying abroad, as they will become less favourable to over seas businesses due to higher prices.

(I think, im tired..)

(edited 7 years ago)

Reply 139

GFEFC1

Original post by Lewis7_

Just had a quick look at them and although they take up a full page it seems rather useless information aha.

I guess you could talk about how the pillars could limit VGL in achieving their objectives. For example, they stress that they 'Source their supplies in a responsible and sustainable manner'. One could presume that this is not the cheapest way due to health and safety legislation being costly and thus increasing VGL's costs. With their objectives mainly being growth based (in particular the 6% revenue increase) extra capital is likely to be needed so any increased cost will diminish this... Suppose you could go into detail about how a reduction in capital could prove detrimental especially concerning the textiles diversification (which appears to be a huge opportunity to achieve their 6%)

But then you could argue that because they are paying extra, it highlights their true passion for helping the planet and it is not just a business ran to make money. This could determine whether VGL achieve their 2 additional contracts as a more energy efficient firm may prove more attractive to councils and the government (tackling global warming etc)

This is a real shot in the dark so i might be well off aha, only just properly read through them. But hope it helps.