IGCSE Business Studies

Quiz – Semester II
First Name & Last Name :   Class : 10A & 10B

Teacher : Ms. Iram Jamil Date :  

Moderator (HOD) :  Ms. Shazia Janjua Score :  

1 Bakin Group (BG) is a limited company. It has 3 holiday parks that offer families holiday
accommodation and activities. BG aims to look after its customers’ needs 24 hours a day.
Customers pay for the holidays when they arrive at the park. Each park has 3 managers and
40 part-time employees. BG uses a wide range of social media networks for promotion. The
Finance Director is worried about BG’s cash flow position. He cannot decide if an overdraft
is the best way for BG to solve its cash flow problem.

Table 1: Cash flow forecast for period January - March 2019 ($000)

January February March

Cash in 120 80 70
Cash out:
Interest 10 10 10
Wages and other
100 90 90
costs
Total cash outflow 110 100 100
Net cash flow X (20) (30)
Opening balance (40) (30) (50)
Closing balance (30) (50) Y

(a) What is meant by ‘net cash flow’?

The difference of inflows and outflows {Inflow - outflow} [2]

(b) Calculate the values of X and Y.

X: ( 1 2 0 ) - ( 1 1 0 ) = (10)

Y: .(30)+(50)=(80).[2]
 (c) Do you think an overdraft is the best way for BG to solve its cash flow problem? Justify
your answer.

BG can lend an overdraft as it is not restricted to a limited amount of money, so that BG

wants to take more money for paying the suppliers or the monthly expenses it would be fine, but the
will need to pay interest on the amount withdrawn. It is easier to arrange the overdrafts rather
than other short-term finance ways. In addition, the bank has the right to ask the repayment at any
time as there is no limited repayment time. Either ways BG should find a way of increasing their
customers without increasing their costs so that the cash inflow can increase raising the chance of
this problem being solved

[6]

2 AllPlay is a toyshop, set up by Vince in 2012. Each year Vince has met his business
objectives including making a profit in 2017. AllPlay imports all of its products. Vince wants
to expand by opening a second shop so he can sell a wider range of products. The cost of
buying the shop is $20 000. One option for finance is a bank loan. Vince’s bank manager will
want to see AllPlay’s Income statement, and other financial documents.

(a) Do you think a bank loan is the best source of finance for Vince to choose? Justify your
answer.

Allplay is a large company therefore lending a bank loan would be one of the best
options because they will have low interests on the loan as well as they will be able to
pay the loan over a longer period of time. In addition, they can be lended quickly as
the bank doesn’t need that much info about how the business is doing currently. On
the other hand, Allplay might need to sell some of its assets if the loan was not paid
back. [6]