M19-3-BUSMT-SP2-ENG-TZ0-XX

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Keycap Digit Two

Paper 2

Question 1 - MaximumMarks - 10

Carolina is planning to establish a bakery named Las Migas in a small town. Given the strong competition from existing bakeries, she needs a bank loan to supplement her personal savings. The bank manager has requested a business plan and a cash flow forecast for the first four months of operations. Carolina, despite her lack of experience in financial forecasting, has estimated the figures for the first four months, which are summarized in Table 1.

Question 1 - Table

Question 1 - A

This question asks you to identify two elements, other than a cash flow forecast, that should be included in a business plan. A business plan is a comprehensive document that outlines the objectives, strategies, and financial projections of a business. It serves as a roadmap for the business and is often required by banks and investors to assess the viability of the business.

Question 1 - A - Answer

Two essential elements of a business plan, other than a cash flow forecast, are: 1. Executive Summary: This is a concise overview of the business plan, summarizing the key points such as the business concept, financial features, and current business position. It provides a snapshot of the business and is often the first section read by potential investors or lenders. 2. Market Analysis: This section includes an analysis of the industry, market size, target market, and competition. It provides insights into the market conditions and helps in understanding the potential demand for the business's products or services.

Question 1 - A - Answer - EC

The candidate has correctly identified two critical elements of a business plan: the executive summary and market analysis. These elements are fundamental in providing a comprehensive overview of the business and its market environment. The executive summary offers a quick insight into the business's goals and financial projections, while the market analysis helps in understanding the competitive landscape and potential customer base. The response is clear, concise, and demonstrates a good understanding of the components of a business plan.

Question 1 - B

This question requires you to prepare a cash flow forecast for Las Migas for the first four months of operations. A cash flow forecast is a financial document that estimates the inflows and outflows of cash over a specific period. It helps in understanding the liquidity position of the business and planning for future cash needs.

Question 1 - B - Answer

To prepare a cash flow forecast for Las Migas, we need to consider the estimated sales, expenses, and other financial figures provided. The cash flow forecast for the first four months is as follows: <table border="1" cellpadding="5" cellspacing="0"><tr><th>Month</th><th>1</th><th>2</th><th>3</th><th>4</th></tr><tr><td>Sales</td><td>$1500</td><td>$1500</td><td>$3500</td><td>$3500</td></tr><tr><td>Total receipts (inflows)</td><td>$1500</td><td>$1500</td><td>$3500</td><td>$3500</td></tr><tr><td>Rent</td><td>$1000</td><td>$1000</td><td>$1000</td><td>$1000</td></tr><tr><td>Interest</td><td>$45</td><td>$45</td><td>$45</td><td>$45</td></tr><tr><td>Salary</td><td>$390</td><td>$390</td><td>$390</td><td>$390</td></tr><tr><td>Ingredients and supplies</td><td>$450</td><td>$450</td><td>$1050</td><td>$1050</td></tr><tr><td>Electricity</td><td>$15</td><td>$15</td><td>$35</td><td>$35</td></tr><tr><td>Total payments (outflows)</td><td>$1900</td><td>$1855</td><td>$2520</td><td>$2475</td></tr><tr><td>Net cash flow</td><td>($400)</td><td>($355)</td><td>$980</td><td>$1025</td></tr><tr><td>Opening balance</td><td>$100</td><td>($300)</td><td>($655)</td><td>$325</td></tr><tr><td>Closing balance</td><td>($300)</td><td>($655)</td><td>$325</td><td>$1350</td></tr></table> This forecast provides a detailed view of the expected cash inflows and outflows for Las Migas over the first four months, helping Carolina plan for potential cash shortages and manage her finances effectively.

Question 1 - B - Answer - EC

The candidate has accurately prepared a cash flow forecast for the first four months of operations for Las Migas. The forecast includes all necessary components such as sales, rent, interest, salary, ingredients and supplies, and electricity. The calculations are correct, and the forecast is presented in a clear and organized manner. The candidate has demonstrated a good understanding of how to prepare a cash flow forecast and has effectively applied the given data to create a comprehensive financial document. This response would be awarded full marks for its accuracy and clarity.

Question 1 - C

This question asks you to explain one problem that Las Migas may experience as a new business. New businesses often face various challenges, including financial, operational, and market-related issues. Identifying and understanding these problems is crucial for the survival and growth of the business.

Question 1 - C - Answer

One significant problem that Las Migas may experience as a new business is the difficulty in obtaining credit from banks and suppliers. Since Las Migas is a start-up with no trading records, banks and suppliers may be reluctant to extend credit. This can hinder Carolina's ability to secure the necessary funds to set up and operate the bakery. Additionally, the competitive market environment may make it challenging for Las Migas to attract customers and generate sufficient revenue to cover its expenses. Without adequate financial support and a strong customer base, Las Migas may struggle to sustain its operations and achieve profitability.

Question 1 - C - Answer - EC

The candidate has correctly identified a common problem faced by new businesses: difficulty in obtaining credit from banks and suppliers. The explanation highlights the challenges of securing financial support and the impact of a competitive market environment on the business's ability to attract customers. The response is well-articulated and demonstrates a good understanding of the potential issues that new businesses may encounter. By addressing both the financial and market-related challenges, the candidate has provided a comprehensive explanation of the problem, which is essential for full marks.

Question 2 - MaximumMarks - 10

DuffJD provides a laundry service for towels and sheets to three hotel chains in a major city, Hoyluk. It provides each hotel chain with trade credit. Competition in this market is increasing, as two rivals are planning to offer laundry services to hotel chains in Hoyluk. The financial data for DuffJD for 2018 is as follows:

Question 2 - Table

Question 2 - A

Question 2 - A - Answer

Trade credit is an important source of short-term finance available to businesses. It allows a business to buy goods and/or services on account without making immediate cash or cheque payments. Essentially, it is a short-term source of finance that provides businesses with the flexibility to manage their cash flow more effectively by delaying payment for goods or services received.

Question 2 - A - Answer - EC

The candidate's response accurately defines trade credit as a short-term source of finance that allows businesses to purchase goods or services without immediate payment. The explanation is clear and concise, demonstrating an understanding of the concept and its importance in managing business cash flow. The response meets the criteria for full marks.

Question 2 - B

Using the financial data for DuffJD for 2018, calculate:

Question 2 - B - i

the contribution per unit per item laundered (no working required);

Question 2 - B - i - Answer

The contribution per unit per item laundered is calculated by subtracting the variable cost per unit from the price charged per unit. Therefore, the contribution per unit is: $(2.00 - 0.50 = 1.50)$ Thus, the contribution per unit per item laundered is $1.50.

Question 2 - B - i - Answer - EC

The candidate has correctly calculated the contribution per unit by subtracting the variable cost from the price charged per unit. The response is accurate and concise, demonstrating an understanding of the concept of contribution. The final answer is clearly stated, meeting the criteria for full marks.

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Standard Level

Business Management SL

Mathematics AA SL

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Higher Level

Business Management HL

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Core

Theory of Knowledge

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Ab Initio

Spanish Ab Initio

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Biology SL

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Physics HL

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Chemistry HL

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Chemistry SL

Economics HL

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Economics SL

History HL

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History SL

Geography SL

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Geography HL

Mathematics AI HL

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Mathematics AI SL

Biology HL

Psychology SL

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Psychology HL

Design Technology SL

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Design Technology HL

Physics SL

Mathematics AA HL

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Environmental Systems & Societies SL

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Sports, Exercise & Health Science HL

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Sports, Exercise & Health Science SL

English B SL

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English B HL

English A Language & Literature HL

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English Literature SL

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English A Language & Literature SL

English Literature HL

Spanish B SL

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Question 2 - B - ii

Question 2 - B - ii - Answer

Question 2 - B - ii - Answer - EC

Question 2 - C

Question 2 - C - Answer

Question 2 - C - Answer - EC

Question 2 - D

Question 2 - D - Answer

Question 2 - D - Answer - EC

Question 3 - MaximumMarks - 10

Question 3 - Table

Question 3 - A

Question 3 - A - Answer

Question 3 - A - Answer - EC

Question 3 - B

Question 3 - B - Answer

Question 3 - B - Answer - EC

Question 3 - C - i

Question 3 - C - i - Answer

Question 3 - C - i - Answer - EC

Question 3 - C - ii

Question 3 - C - ii - Answer

Question 3 - C - ii - Answer - EC

Question 3 - D

Question 3 - D - Answer

Question 3 - D - Answer - EC

Question 3 - E

Question 3 - E - Answer

Question 3 - E - Answer - EC

Question 4 - MaximumMarks - 10

Question 4 - A

Question 4 - A - Answer

Question 4 - A - Answer - EC

Question 4 - B

Question 4 - B - Answer

Question 4 - B - Answer - EC

Question 4 - C

Question 4 - C - Answer

Question 4 - C - Answer - EC

Question 4 - D

Question 4 - D - Answer

Question 4 - D - Answer - EC

Question 5 - MaximumMarks - 10

Question 5 - A

Question 5 - A - Answer

Question 5 - A - Answer - EC

Question 5 - B

Question 5 - B - Answer

Question 5 - B - Answer - EC

Question 5 - C

Question 5 - C - Answer

Question 5 - C - Answer - EC

Question 5 - D

Question 5 - D - Answer

Question 5 - D - Answer - EC

Question 6 - MaximumMarks - 20

Question 6 - Answer

Question 6 - Answer - EC

Question 7 - MaximumMarks - 20

Question 7 - Answer

Question 7 - Answer - EC

Question 8 - MaximumMarks - 20

Question 8 - Answer

Question 8 - Answer - EC

IB BUSINESS MANAGEMENT SL, Paper 2, May, 2019, TZ0, Solved Past Paper