CAPE MOB 2002-2010 Unit 1 Past Papers

-2 SECTION A MODULE 1 BUSINESS AND ITS ENVIRONMENT Answer ONE question from this section. 1. Discuss how your country's economic system impacts on the operations of a local business entity. Total 25 marks 2. .A country's success in the global marketplace is a direct result of the company 's multi-faceted approach to cross-cultural preparation'. Explain the challenges faced by Caribbe an business organisations as aresult of globalisation. Total 25 marks SECTION B MODULE 2 THE MANAGEMENT OF PEOPLE Answer ONE question from this section. I 3. 'Motivation of subordinates is an important aspect of a manager's job' . I F (a) Examine THREE factors that motivate a person to work well. [13 marksl I I (b) Identify and evaluate FOUR steps managers may take to motivate their subor dinates. [12 marks] I I i 4. Tlvo important strategies for effective management of an organisation include: ( i) training of employees and (ii) conflict management. With reference to the above statement:

(a) DiscussTHREE advantages andTWO disadvantages of an 'on the job'system of trainin g. [15 marks] O) Discuss THREE major strategies a manager may use to resolve conflict in his o rganisation. [10 marksl GO ON TO THE NEXT PAGE m/'37USPEC,m2

-3 SECTION C MODULE 3 BUSINESS FINANCE AND ACCOUNTING Answer ONE question from this section. 5. (a) What are the advantages of debt financing to a firm? f6 mu.t\, _., "1 O) A medium-sized retail chain wishesgg+xpanA*L-deLlo it needs to raise addition al capital. suggestT!![lE possible r rn4 tgur9!!-g:Tglg*-d this exercise and comment on the relative merits of financing thdrefi;inder byEiTHER equity OR debt method s. [19 marks] Total 25 marks 6. The following relates to the Income Statement and Balance Sheet of Blackwood and Company Ltd for the period ending 3Il12/98. Sales 10,795,000 Cost of Sales 8,650,000 Less Overheads: Administration Expenses: Wages & Salaries 235,000 Supplies & Stationery 96,000 Heat & Light 50,000 Rates, Rent & Insurance 75,000 Depreciation 10,000 465,000 Finance Interest 100,000 Bad debts 95,000 195,000 Selline Salaries 100,000 Distribution 50,000 Advertising 100,000 300,000 t\ r ---.'^ if -)t ,jfr t^G, ltr+' i ', dOr^t^;-.*b{l f GO ON TO THE NEXT PAGE oa4372tSPEC2002 ,/,

I i fl ii lr u\ -4 BALANCE SHEET Fixed Assets Freehold Premises 3,(X)0,U)0 Leasehold Premises 630,000 Plant&Machinery 2,645,000 MotorVehicle 770,000 LongTerm Investments 795,000 7,840,000 Current Assets Inventories (Stock) 5,500,000 Debtors Prepayment 1,500,000 Marketable Securities 500,000 Bank Balance 100,000 7,6i00,000 Total Assets 15,440,000 Share Capital-& Reserves Ordinary Shares 5.300.000 Preference Shares 2,100,000 Reserves 2,500,000 9,900,000 Long Term Liability Debentures r 2,500,000 2,500,000 Current Liabilities Creditors l,'754,ON Tax Payable 5m,qn BankOverdraft 45l,mo Proposed Dividends 33s,mo 3,040,000 Total Capital Liabilities 15,440,000 From the above financial statements, calculate the following ratios and state TW O important features of EACH. (a) Current Ratio [5 marks] O) Inventory Tirnover [5 marks] (c) Gross ProfrtMargin [5 marksl (d) Interest Cover Ratio [5 marks] (e) Gearing Ratio [5 marks] Total25 marks END OF TEST

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-2SECTION A MODI'LE T _ BUSINESS AI\TD ITS ENYIRONMENT Answer OflE question from this section. : V 1. (a) Identiff and evaluate FIVE ways in which multi-national iorporations ha ve impacted on [15 marks] countries of the region. I t r Identiff TWO ways in which a multinational company may have to adapt its operati ons to (b) .9 r.f suit the Caribbean business environment Explain the rationale for, and the possi ble effect 4\fr'lt .q' U r l' [10 marlsl ,,'L of EACH adaPtation on the comPany' ,ir'' Total25 marks 2. (a) Discuss FOUR circtmstmccs undcrq,hich stab cmbol of privale business is just ified. [8 marls I (b) Suggsstadjustifyll{REE objcctivesyouthinkapublicly owned business should Pursue[ 9 marks I With the aid of TWO examples, explain the concept of 'franchising'. (c) (r) (iD Discuss TWO benefits of this practice to the franchisee. 18 marks l Total25 marks SECTION B MODTILE 2 _ MANAGEMENT OF PEOPLE Answer OI\E question from this scction.

The OM (Operations Manager) of Flyerbee Airlines is considering delegating the t ask of procuring 3. food suppliis and monitoring aircraft maintenance to two of his supervisors' [2 marla I (a) Distinguishbetween'delegation' and'decentralization'' (b) outline Two benefits and TWo disadvantages of delegation. [8 marks I (c) Authority, responsibility and.accointabilrty are three concepts related to the p rocess of .delegation. Define EACH concepl give an example of EACII and explain how these concepts may impact on the success of the Managing Director's attempt at delegat ion at [15 marks] Flyerbee. Total25 marks GO ON TO THE NEXT PAGE 004372|CAPE 2003

-3 1-(a) Distinguish betrvqr leadershipsHb and lea&rship roles and give an example of EACH. [4 marks I o) Cornmunication, considcrdioo, pfrqqing ceching and inspiration are some of the behaviours expected of *Ectiv= btiEs. DsscrlUe EAC! of the fonigoingpehaviours and with the aid of aamplcs, discnss fuT! of EACH in effective leadership. [21 marksl Total25 marks SECTION C MODT'LE 3 _ BUSINESS FINAhICE AITD Ac(](X'NIIIIG Answer OI\IE question fium this section. Arawak Limited manufactures cutlery, vases and cooking utensils. The firm is stort of w orking u/s' capital. (a) Identiff, describe and explain the impact of THREE alternatives which the trrm m ey use to increase its working capital. lfs r.rbl -t I O) State THREE criteriaArawak Limited may use to chose among the altemative s idcdifcd in (a) above and explain how EACH criterion may be used to make the choice. [10 mer]rl Total25 mutr 6. Cornwall School and Oflice Supplies Ltd. published accouhts and recorded the fol lowing information for the last two years of operations: \ tgv, 2000 Profit before tax and interest $10 m $20 m Net assets employed $300 m $250 m Sales furnover $8,200 m $700 m (a) Using the information above, calculate THREE p-1qfi@b_itity ratigs and use your resuls to comment on the company's performance in 2000. Assume a tax rate of 25Vo. 115 marksl

(b) Explain THREE limitations of accounting ratios and suggest how EACH of these mig ht be overcome. [10 marlsl Total25 marks END.OF TEST O0/.3TACAPE 2003

-2 SECTION A MODI,'LE 1 BUSIhTESS AI\TD ITS EhTVIRONMENT Answer ONE $cstion ftom thb section. Question I t I' Carmen Martin is contemplating turning her itinerant (mohile) cmeen into a full fast-food restaurant. " She is pondering whether to maintain the sole proprietorship sbe hr*, whetber sh e should organize the business as a partnership with two friends or form a private limited cmpmy with them. :l (a) Describe THREE features of each form of business Carmen is considering. [ 9 marks] ol' (b) Discuss TWO advantages and TWO disadvantages of organizing the restaunut as a li mited L, ^0 'rt,u /1.' -)-t. company rather than a partnership. [16marks] Ibtal25 marks Question 2 The success of an insurance company is strongly influenced by external environme ntal forces. (a) Explain, with specific examples, TWO ways in which each of the following can fac ilitate an ir insurance company in conducting its business (i) legislation (ii) information technology (iii) trade liberalization [12 marksl (b) Explain, with specific examples, TWO ways in which c.cl of the following can hin der an insurance company in conducting its business (i) competition (ii)

nahml environment . (iii) globalization [13 marks] Total25 marks GO ON TO THE NEXT PAGE vn32azorcAPE200/

SECTION B MODULE 2 MANAGEMENT OF PEOPLE Answer ONE question from this section. Question 3 inwhich Frederick Herzberghas developed what is referred to as the 'twofrctor theory of motivation" he argues that job satisfaction and dissatisfaction are caused by two distinct s ets of factors. Name the TWO factors of motivatim ideatified by H lzb rg-[ 2marks] (a) (i) ;t, [ 4marks] (ii) Describe the factors you narned in (a) (i) above' (iiD Give TWO examples of ach of the frtqs described in (a) (ii) above. [ 4 mark s] ^L! 1".r:: " Explain how the Two factors outlined in (a) above lead to job satisfaction oR dissatisfaction (b) [ 8marks] inLorganization. t.tlt (c) Outline a three-phase plan which you, as a Human Resources Manager, would us e to bring about job satisfaction in an organization based on Herzberg's theory' [ 7 marks] Total25 marks Question 4 Joy Manning has just been appointed the Human Resources (HR) Manager for a cemen t manufacturing plant. Joy nL naO no training in HR management, however, she recalls vaguely tha t HR managers are Lrponriut" for five major activities in an organization viz. recruitment, select ion, training, performance assessnrent and remuneration. , -'-, .' (a) Describe the FIVE activities which HR managers have responsibility for' [ 5 mark sl Explain ONE way in which clear policies for the execution of each activity can c ontribute to (b)

the effectiv" -un"g"-"nt of people in her organization. [10 marksl Explain THREE ways in which labour unions can impact on the HR manager's job. (c) [ 6 marks] Describe TWO waYs in which JoY Manning can ensure a healthy and safe working env irorunent' (d) [ 4 marks] Total25 marks GO ON TO THE NEXT PAGE o2l32020lcAPE ?CO4

e) ?3,9o * reo (3> G.4/z-1 Ket,o ('t) Sfa.t* L t ?* avtt aowcJ .) 53a J33 59 &oD -4 4tl --n.b'L (c) Current Ratio (2.1) (d) Acid TeSt Ratio (0.98 : l) (e) Return on Capital Employed (L8Vo) . I2S marksl Total25 marks GO ON TO TTIE NEXT PAGE 02t33020lcAPE 2005

-4 6. A company is considering investing in one of three projects, A, B or C. The init ial cost and net cash inflows from EACH project are shown below. The company has the option of bo rrowing the amount to cover the cost of either project at 9Vo interest per annum. ftj'rr4 {' Cash Flow Project A Pmject B Project C -$2, ooo (Initial Cost) 43,500 42,000 40,000 q 6q& ra* O' ql}. .?-: I'r \ ? ?" rt A:' Fr1 I 8,400 lo,l00 9,640 lt t3q * aTlv,.z 2', 8,820 10,605 to,r22 .t t bqf'x$'?ot: 13 tf *{ * F"{B*.}: 9,702 11,666 I I,134 4 10,187 12,249 lr,69l t r 31 .q t *572'1 5 11,715 14,086 13,M5 + ?s 15' q + te +J.Z + e?3t. ! Discount factors at 9Vo per annum: t >q"4. Year Factor Year Factor I o.917 4 0.708 2 o.842 5 0.650 3 o.772 (a) Compute the Net Present Value of EACH project. lL8 marksl (b) On the basis of the Net Present Value criterion, in which project should the com pany invest? Give ONE reason for your answer. [ 3 marks] (c) Outline ONE advantage and ONE disadvantage of the Net Present Value criterio n r compared to the Payback Period. . t 4 marksl Total25 marks -4 A,*, -f--) + :" 4 u ":*.-e *:' 9:}i * ;. &-f Eg) xflt":Stc* A : i! 'iv *J + {4a oa x {:..i ., .',.}.r {-rc I f,a {-r:-:};)f i i' :!i ; g f \ -i*i,tp,*

Q3,{'.}1 J :+ AoZ,? +:&tyZt*',4 + 2"r 87.at.1. VZt?.rl + *6t*.? : -S6**5.+ END OF TEST G =-\?, ooJ .l* f *, , *: * 9. a n) a-ir i i:'*rtu lL &'? ftryd + f..ioC"rpE" ?t n,,g{, A; + { , 3. ir h 't ,, i1r i i\{ } +, 6.t ugg X p.{rU) q?oi'.rJ luut:z + Fq?q.q + q-Pilt.to;0rcAPE200s c6b??-'$ t* 1r+s'1 : g Z,z*5,*

-2 SECTION A MODULE 1 BUSINESS AND ITS ENVIRONMENT Answer ONE question from this section. l. (a) Defineglobalization. [ 3marks] (b) Outline THREE factors which have contributed to the growth of globalization. [ 6 marks] (c) Discuss, giving suitable examples, FOUR ways in which globalization may impact o n organizations operating within the Caribbean Business Environment. [16marks] Total25 marks 2. John, the hoduction Manager of Carib Incorporated, has an option of locating his firm's production plant in Moonlight Island or Sunny Isle. He is provided with the following data on both countries. Moonlight Island Level of Demand Probability ${no Hieh .4 80 Medium .4 40 Low .2 -20 $rrnny Isle Level of Demand Probability $000 High _4 60 Medium .4 40 Low .2 30 (a) (i) Draw a Decision Tree to illustrate the above scenario. [ 9 marks] (ii) Calculate the expected value for: (a) Moonlight Island (b) Sunny Isle [ 4 marks] (iii) Recommend to John, the country in which he should locate the production plant, and why. [ 2 marks] GO ON TO THE NEXT PAGE o2r33020tcAPE 2006

-J rr (b) Apart from the decision tree, John has been informed that the Critical Path Anal ysis (CPA), a Network Analysis Technique, can also be used as a decision-making tool. (i) Define "Network Analysis". [ 2 marks] (ii) Outline TWO advantages and TWO disadvantages of using the Critical Path Analysis as a decision-making tool. [ 8 marks] Total25 marks SECTION B MODULE 2 MANAGEMENT OF PEOPLE Answer ONE question from this section. 3. Many organizations suffer from poor communication. (a) Discuss THREE principal barriers to good communication in an organization. [ 9 marksl (b) Explain ONE way in which EACH barrier discussed in (a) above might be overcome. I 6 marfrdJ (c) Describe TWO important features of: (i) The Formal Communication Network [ 4 marks] (ii) The Informal Communication Network. [ 4 marks] (d) Outline TWO advantages of face-to-face communication over written communication. [ 2 marks] Total25 marks 4. Change is a crucial element in an organization's ability to survive and grow. (a) Discuss FOUR reasons why people resist change. [12 marks] O) Discuss FOUR conditions which are necessary for change to be successfully implemented. [13 marks] Total25 marks GO ON TO TIIE NEXT PAGE o2r33020tcAPE 2006

.4 SECTION C MODULE 3 BUSINESS FINANCE AND ACCOUNTING Answer ONE question from this section. i 5. A company has three projects, A, B and C which it is considering for investment. Since funds are scarce, the company can only invest in one project. The initial investment i n the projects and the expected cash flows are shown below. The interest rate facing the compan y is llVo p.a. , I A Bc ; i t $ $$ i Initial outlay 9 200 18 300 26 000 I I Cash Flows I I I Year I 2 500 5 100 3 200 l Year 2 3 100 5 200 7 500 tl' Year 3 3 100 5 600 8 125 Year 4 3 200 5 700 9 450 I i Year 5 3 800 5 775 10 200 i

Present value of $1 received at the end of a number of years at ll% is as follow s I 1 Year 12 345 PV of $l 0.901 4.8r2 o.731 0.6s9 0.593 (a) Compute the Net Present Value (NPV) of EACH project using a discount rate of llV o. [l8marks] (b) Based on the NPV determine which project the company should invest in and justif y yourrecornmendation. [ 4marks] (c) Compare the implication of the NPV of project B and project C. [ 3 marks] Total25 marks 02r33020/cAPE 2006 GO ON TO TI{E NEXT PAGE

-5 6. (a) Distil_guish between EACH. an operational budget and a capital budget and give an example of [ 4 mirks] (b) L. Carter is a wholesaler whose financial year ends in March. His balance sh eet at March 31,2005 and as well as additional information are shown below. Prepare a Cash Budget in columnai (tabular) form in as much detail as possible f or the months of April and May 2005. Round all final figures to the nearest whole numbe r. $ $ Fixed.Assets at cost Accumulated Depreciation 40 000 2 400 Ordinary Share Capital 30 000 ' Creditors 27 3OO 37 600 Accrued Expenses 4 150 Stock 6 000 Debtors 9450. Bank 8 400 23 850 61 450 61 450 rl NOTES (i) March Budgeted sales (in units) are as follows:900 '1 April 1 000 May I 500 June I 200 (ii) Each unit sells at $42. (iii) credit is collecfed in theAll sales are made on credit. 75Vo of goods sold on month of the sale and 25Vo in the month following. (iv) April Budgeted purchases are as follows:I 100 units May I 440 units June 1 280 units (v) The purchase price of each unit is $30 and goods bought are paid for in the same montli of the purchase. (vi) Accrued expenses consist of rent owing for the months February and March ($3 000) and utilities for the month of March. (vii) Accrued rent is to be paid in April; rent for the current quarter is to be paid in each month as it becomes due. (viii) Utilities are paid one month in arrears. Utility expenses are as follows: -April $1 240; May $1 300 and June $1 400. [21 marks] Total25 marks END OF TEST o2l33020tcAPE 2006

-! -2 SECTIONA MODULE 1: BUSIITIESS AND ITS ETWIRONMENT Answer ONE question from this section. 1. The concept of globalization has been one of the most current topics of discussi on in the Business World. (a) Define'globalization'. [ 3 marks] (b) Discuss THREE positive and TWO negative impacts of globalization on Caribbean business organizations. [22 marksl Total25 marks ) (a) Discuss TWO main contributions of small businesses to the development of you r colmtry'seconomy. [ 6marks] o) Discuss THREE challenges faced by small lusinssses in the Caribbean. [ 9 marks] (c) Identiff THREE criteria used for measuring the size of a business and state ONE advantage and ONE disadvantage of EACH criterion. [10 marks] Total25 marks SECTION B MODI,JLE 2: MANAGEMENT OF PEOPLE Answer OI\E question from this section. 3. (a) Using examples from organizations that you have studied, evaluate FOUR major methods of communication that exist between management and staff. [17 marks] (b) Suggest FOTIR major causes of poor communication between management and staff. [ 8 marks] Total25 marks 4. In today's business organizations, Human Resource Management is broad and far re aching in scope. With reference to this statement, discuss FIVE main functions of the Huma n Resource

Department. [25 marks] Total25 marks GO ON TO TTIE NEXT PAGE 02r33020tcAPE 2007

SECTION C MODULE 3: BUSINESS FINANCE AI\D ACCOUNTING Answer ONE question from this section. 5. A company is considering investing in one of three projects A, B or C. The initi al cost and cash flows of each project are shown below. The company has the option of borrowing t he amount to cover the cost of each project at IlVo interest per annum. Cash FIow ProjectA Project B Project C tnitial Cost $40 m0 $28 000 $30 400 I 12 Ofi) l0 m0 8 100 2 t2200 10 100 8 600 3 11 8m 9 600 t2 000 4 142W 9 900 13 lm 5 14 380 10 100 15 000 (a) Show the gymu!1i_v9 cash flow for EACH project. [12 marks] , (b) Compute the payback perid in years, to one decimal place, for EACH project. [ 6 marks] (c) Indicate which project the company should accept and why. [ 2 marks] (d) Outline ONE advantage and ONE disadvantage of using the payback period as a proj ect appraisal criterion. [ 2 marks] (e) Assume the IRR [Intemal Rates of Return] for the respective projects are as foll ows: A lL.57o B 87o C l1Vo Indicate which project the company should accept, giving ONE reason for your cho ice. [ 3 marks] Total25 marks GO ON TO TI{E NEXT PAGE 02t33020tcAPE 2007

-'1 -4 6. Kensington Creations markets a single product. The following facts relate to its inventory for the six-month period, January to June. At the beginning of January the company h ad opening stock of 15 units @ $20 per unit. In February, the company bought 25 units @ $18 per unit, and in March, the company sold 18 units. InApril, the company bought 10 units @ $22p erunit and in June it sold 16 units. (a) Construct a table which shows the value of the closing stock at the end of EACH month using the 'Last In First Out' method of accounting for stock. [10 marks] (b) Compute the Cost of Goods Sold EACH month, for the six-month period. [ 5 marks] (c) If the items are sold for $52 each, draw up a Trading Account for the six-month period ending June 30. [10 marksl Total25 marks END OF TEST E I -v -ol -CA 02r33020tcAPE2W7

n SECTION A MODULE I: BUSINESS AI\D ITS ENVIRONMENT Answer ONE question from this section. 1. Discuss FOUR positive impacts and FOUR negative impacts that a multinational cor poration may have on the host country. t25 marksl Total25 marks (a) Describe the following steps in the Rational Decision Making Process: (i) Defining the problem (ii) Collecting data (iii) Developing alternatives (iv) Analyzing the alternatives (v) Selecting and implementing the alternatives (vi) Evaluating results [12 marks] (b) Mr. Technil, the purchasing manager of a large hardware firm, is thinking about purchasing four new computers for his departrnent. Explain how Mr. Technil can use EACH step outlined in (a) above in deciding whic h computers to purchase. [13 marks] Total25 marks SECTION B MODULE 2: MANAGEMENT OF PEOPLE Answer ONB question from this section. 3. (a) Discuss FOUR factors that may influence effective teamwork. [12 marks] (b) Evaluate THREE benefits of using a team approach in the workplace. [13 marks] Total25 marks 4. (a) Define EACH of the following functions of management: (i) Planning (ii) Organizing (iii) Leading (iv) Controlling [ 8 marks] (b) Explain how the application of EACH function of management would help Miss GoodCook to operate her restaurant business more efficiently. [17 marks] Total25 marks

GO ON TO THE NEXT PAGE 02I33020|CAPE 2008

-3 SECTION C MODULE 3: BUSINESS FINANCE AND ACCOUNTING Answer ONE question from this section. 5. (a) Define the following accounting concepts giving ONE example of EACH: (i) Prepayments (ii) Accrued expenses [ 6 marks] (b) Following is aTrial Balance of The Corner Shop as at 30 June 2005 which is the e nd of its financial period. Equipment at cost 20 240 Accumulated Provision for Depreciation: Equipment 8 400 Vehicles at cost ll 500 Accumulated Provision for Depreciation: Vehicles 4 600 Debtors 15 500 Less Provision for Doubtful Debts I 240 Sales 2t 200 Cost of Goods Sold 4 350 Capital 18 640 Rent 2 490 NOTES l. Equipment is depreciated at lOTo on a reducing balance basis. 2. Vehicles are depreciated at ISVo on a straight line basis. 3. Bad debts totalling $625 are to be written off. 4. Rent owing is $200. 5. The Provision for Doubtful Debts is to remain at the same proportion to Debtors as in the previous year. Instructions (i) Compute the depreciation expense for equipment. [ 3 marks] (ii) Compute the depreciation expense for vehicles for the year. [ 2 marks] (iii) Compute the Provision for Doubtful Debts for the year. [ 3 marks] (iv) Construct the Trading and Profit and Loss Account, in vertical format, for the-y ear ending 30 June 2005. [lL marks] Total25 marks GO ON TO THE NEXT PAGE o2t33020tcAPE 2008

4 6. Following is the condensed Balance Sheet of Carib Enterprises, a sole proprietor ship for the year ending 30 September 2005. Fixed Assets 20 200 Stock 3 680 Debtors 8 940 Bank 2 480 15 100 35 300 : Capital 26 000 Net Profit 4 330 30 330 Drawings I 730 28 600 Loans 2 300 Creditors 4 400 _il__iqq Sales for the year amounted to $47 900, Cost of Sales is $24 800 and Opening Sto ck is $4 600. (a) Compute the following ratios: 2004 (i) Net profit margin (7Vo) (ii) Mark up (827o) (iii) Current Ratio (3.8:1) (iv) Stock turnover (4.5 times) (v) Return on Capital Employed (13.57o) (based on average capital) (b) Explain what EACH ratio indicates about the performance of the company for the TWO years. The ratio for the previous year ending 30 September 2004, is shown in brackets. [25 marks] Total25 marks I END OF TEST I -* IN

IOO -oo 02t33020/cAPE 2008

-2 SBCTION A MODULE 1 BUSINESS AND ITS ENVIRONMENT Answer ONE question from this section. 1. Kevin James, a tailor, is contemplating whether to remain as a sole trader or to form a private limited company. (a) Explain to Kevin TWO advantages and TWO disadvantages that a private limited company has over a sole trader. [12 marks] (b) Discuss THREE'ways in which a change in the economic system of the country from a mixed economy to a planned economy could affect Kevin's decision to form a priva te limited company. [13 marks] Total25 marks ., Discuss THREE benefis and THREE drawbacks that Caribbean countries could experie nce with multinationals operating in thefu territories. [25 marks] Total25 marks GO ON TO THE NEXT PAGE 02r33020tcAPE 2009

-3 SECTION B MODULE 2 MANAGEMENT OF PEOPLE Answer ONE question from this section. 3. Weber conceptualized that organizations would be managed on an impersonal, ratio nal basis. Weber called this form of organization a bureaucracy. (a) Outline FOUR characteristics of a bureaucracy as specified by Weber. I I marks] (b) Discuss FOUR implications of "Weber's bweaucracy" on today's business orgarizati ons. [17 marks] Ibtal25 marks 4. Change is a crucial element in an organization's ability to survive and grow. (a) Explain FOUR reasons why employees resist change. [12 marks] (b) Discuss THREE methods that can be used to address resistance to change. [13 marks] Ibtaf 25 marks GO ON TO THE NEXT PAGE o2r33020tcAPE 2009

l -4-4I SECTION C MODULE 3 BUSINESS FINANCE AND ACCOUNTING Answer ONE question from this section. 5. (a) (i) Define the term 'working capital'. [ 2 marks] (ii) Identify THREE components of working capital. [ 3 marks] (b) Buddy is setting up a new gas station and convenience store and requires financi ng for the following areas: Land and building Machinery and equipment Stock of petrol Stock for convenience store Wages for employees (for the frst week) Identify the MOST suitable source of finance for EACH of the above areas of the business. For EACH source identified, explain why it is the MOST suitable. [20 marks] Total25 marks GO ON TO THE NEXT PAGE o2t33020tcAPE 2009

-5 6. The following is the Balance Sheet of Eastwood Hardware Ltd. as at December 3 I , 2008 . Study the Balance Sheet and answer the questions that follow. Eastwood Hardware Ltd. Balance Sheet as at December 31,2008 Fixed Assets $ Cost Less $ depreciation $ Buildings 500 000 50 000 450 000 Plant and machinery 100 000 40 000 60 000 Furniture and fittings 50 000 20 000 30 000 Motor vehicles 70 000 20 000 50 000 720 000 130 000 590 000 Current Assets Stocks 140 000 Debtors 30 000 Prepayments 5 000 Cash I 000 176 0m Less current liabilities Bank overdraft 13 000 Creditors 12 000 Accrued costs 1 000 Taxation payable 10 000 36 000 Net current assets (working capital) 140 000 Assets less current liabilities 730 000 Less lonp-term liabilities Bank loan 180 000 550 0m Net assets Financed by Share capital 200 000 Ordinary shares 200 000 Preference shares 400 000 Reserves 150 000 550 000 The following items have been omitted from the Balance Sheet of Eastwood Hardwar e Ltd. Money owed to business from suppliers An item of stock in a warehouse A piece of equipment used to make products

Electricity consumed Rent pdid in advance for the next three months (a) Identify the appropriate sub-heading under which EACH of the omitted items would appear in the Balance Sheet of Eastwood Hardware Ltd. [ 5 marks] GO ON TO THE NEXT PAGE o2t33020tcAPE 2009

-6. I i I I (b) (c) (i) Outline the MAIN difference between performance ratio and liquidity ratio. [ 3 marks] (ii) Identify ONE stakeholder who will be interested in EACH type of ratio. [ 2 marks] Calculate the following ratios forEastwood Hardware Ltd. and explain the implica tion of EACH ratio. (i) (iD (iii) Current Ratio Acid Test Ratio Gearing Ratio [15 marks] Totat 25 marks EI\{D OF TEST 1 1 1 02133020/CAPE 2009

SECTION A MODULB 1: BUSINESS AI\D ITS ENVIRONMENT Answer ONE question from this section. 1. (a) Define the term 'mission statement'and outline THREE reasons why a missio n statement is important to a business. [ 8 marks] (b) (D Identify FOUR criteria that can be used to measure the size of a business . [ 4 marks] (ii) Evaluate the effectiveness of THREE of the criteria identified in (b) (i) a bove [13 marks] Total25 marks 2. A firm is contemplating whether to include social responsibility as one of its m ain objectives. (a) Discuss THREE main objectives of a typical business organization. [13 marks] (b) Define the term 'social responsibility', giving TWO examples of how a firm can d isplay social responsibility. [ 6 marks] (c) Outline THREE reasons why it is important for a firm to practise ',social respon sibility'. [ 6 marks] Total25 marks SECTION B MODULE 2: MANAGEMENT OF PEOPLE Answer ONE question from this section. 3. John, the manager of KPJ Co. Ltd, has been described by his workers as a partici pative leader. (a) Define the term 'participative leadership'. [ 3 marks] (b) Discuss TWO advantages and TWO disadvantages of the participative style of leadership. [16marks] (c) Outline THREE situations in which the participative style of leadership would be useful to KPJ Co. Ltd. [ 6 marks] Total25 marks GO ON TO THE NEXT PAGE 02t33020lcAPE 2010

3 4. (a) (D Define the term'training'. [ 2 marks] (ii) State THREE reasons why training is important to an organization. [ 6 marks] (b) Evaluate TWO conditions under which EACH of the following types of training programmes is BEST suited: (i) Internally based (ii) Extemally based [17 marks] Total25 marks SECTION C MODT]LE 3: BUSINESS FTNAI\CE AI\D ACCOUNTING Answer ONE question from this section. 5. XYZ Co. Ltd is considering investing in one of three projects, A, B or C. The in itial cost and cash flows of each project are shown below. The company has the option of borrowing the amount to cover the cost of either p roject at IIVo interest per annum. Cash Flow Project A Project B Project C Initial Cost $40 000 $28 000 $30 400 Year L 12 000 10 000 '8loo Year 2 12200 10 100 8 600 Year 3 11 800 9 600 12 fi)O Year 4 14 200 9 900 13 100 Year 5 14 380 10 100 15 000 (a) Compute the cumulative cash flow for EACH project. [13 marks] (b) Compute the payback period, in years, to two decimal places, for EACH project. [ 6 marks] (c) Indicate, giving a reason, which project the company should accept. [ 3 marks] (d) Assume the IRR (Internal Rate of Return) of the projects are as follows: A ll.S%o B 8Vo C I5Vo Based on the IRR, indicate, giving a reason, which project the company should ac cept. t 3 marksl Total25 marks GO ON TO THE NEXT PAGE

o2r33020tcAPE 2010

-4 6. The following is the cash flow statement for Nigel Enterprises for the year e nded December 21, 2008. Study the statement and answer the questions that follow. Nigel Enterprises Cash Flow Statement For the year ended December 2lr2OO8 (US $ millions) (US $ millions) Net cash inflow from operatinq activities 6 Returns on investment and servicing of finance Interest received 2 Interest paid (4) Dividends paid (4) Net cash outflow from returns on investments and servicing of finance (6) Taxation Inland Revenue tax paid (4) Investing activities Purchases of tangible fixed assets (4) Purchases of subsidiary undertakings (18) (net ofcash and cash equivalents acquired) Sale of plant and machinery 4 Net cash outflow from investing activities (18) Net cash outflow before financing (22) Financing New secured loan repayable in 2009 t7 Repayment of amount borrowed (2) Net cash inflow from financing 15 Decrease in cash and cash equivalents 7 (a) (i) Explain what is meant by the term 'cash flow statement' [ 3marks] (ii) Identify TV/O financial statements, other than the cash flow statement, that are used by firms. t 2marksl (b) Analyse the cash flow situation of Nigel Enterprises under EACH of the following headings: (D Net cash inflow or outflow from operating activities (ii) Returns on investment and servicing of finance (iii) Net cash outflow from investing activities (iv) Increase or decrease in cash equivalents

(v) Financing [20 marksl Total25 marks END OF TEST 02r33020/cAPE 2010