Student Number

2012
Higher School Certificate

Business Studies
Term 1 Examination General Instructions
Reading time 5 minutes Working time 3 hours Write using black or blue pen Board approved calculators may be used Write your Student Number at the top of the front cover, multiple choice answer sheet, short answer questions and on every booklet Answer multiple choice questions on the answer sheet provided

Total marks - 100 Section I 20 Marks Multiple Choice Questions Pages 1-8

Attempt Questions 1 20 Allow about 35 minutes for this section Short Answer Questions Pages 8-14

Section II 40 Marks

Attempt Questions 21 25 Allow about 1 hour 15 minutes for this section Compulsory Business Report Page 15

Section III 20 Marks

Attempt Question 26 Allow about 35 minutes for this section

Section IV Extended Response 20 Marks Page 16 Attempt Question 27 or Question 28 Allow about 35 minutes for this section

Section I (20 marks) Attempt Questions 120 Allow about 35 minutes for this section
Use the multiple-choice answer sheet for Questions 120 1. Justine Pettycrew, as a Human Resources Director for a public limited company, has spent the past 6 months working with Senior Management to plan out the long-term needs of the business. Which of the following best describes the role she has undertaken in the last 6 months? (a) Outsourcing (b) Strategic (c) Tactical (d) Maintenance

2.

The table below is selected financial information for Topsy Turvy Caterers. Financial Ratio Gearing Ratio Expense Ratio 2010 60% 40% 2011 68% 38%

Which of the following statements best describes the trend in financial performance for Topsy Turvy Caterers from 2010 to 2011? (a) They have taken on less debt relative to owners equity (b) They have increased their expenses relative to net profit (c) They have increased their reliance on external sources of funds (d) They have increased their expenses relative to sales

3.

The Global Financial Crisis (GFC) began in the USA Housing Market and spread to financial markets in the USA and around the world.

How did the GFC influence financial management in Australia in the short-term? (a) Investment banks made higher profits (b) There was less availability of funds in financial markets (c) There was more debt financing by companies (d) Many more companies were listed on the Australian Securities Exchange

4.

How can a business improve its cash flow management? (a) By increasing cost centres (b) By factoring its accounts receivable (c) By using derivatives (d) By charging for early delivery

Use the following information to answer Question 5. Cash Flow Forecast for Millers Makeover. January ($) 60,000 120,000 150,000 February ($) 30,000 110,000 120,000 March ($) 20,000 75,000 105,000 April ($) (10,000) 125,000 65,000

Opening Balance Cash Receipts Cash Payments

5. Which of the following statements most accurately applies to Millers Makeover? (a) In February and March there may be a cash flow problem and Millers Makeover should consider monthly distribution of their large insurance payment which they have paid for in February (b) There is only a potential cash flow problem in April, as April has a negative opening balance (c) Millers Makeover has a solvency problem in April and it will need to undertake an urgent strategy to overcome cessation (d) January is the month that Millers Makeover makes its greatest profit

6.

A business involved in implementing Equal Employment Opportunities in the workplace would be engaged in which of the following?

(a) Granting employment preference to trade union members (b) Giving selection preference to employees from disadvantaged groups (c) Applying an anti-discrimination policy to the recruitment of employees (d) Providing equal wages to all employees regardless of their position in the firm

7.

Which of the following government institutions would investigate a claim that a company has falsified its accounting records?

(a) Australian Securities and Investment Commission (b) NSW Department of Fair Trading (c) Australian Competition and Consumer Commission (d) Fair Work Australia

8.

An employee has made a complaint to her manager regarding an abusive email from a colleague at work.

Which strategy should the manager use first to manage the situation effectively? (a) Mediation (b) Negotiation (c) Sacking the colleague (d) Contacting Fair Work Australia

9.

What is it called when existing shareholders have the privilege to buy a specified number of new shares from a firm at a specified price within a specified time frame? (a) New issue (b) Rights issue (c) Placements (d) Private equity

10. Minimum wage rates, for those on Federal Awards, are currently determined by the: (a) NSW Industrial Relations Commission (b) Fair Work Australia (c) Fair Pay Commission (d) Minimum Wage Board

The following financial information is selected data for Walkers Pty Ltd in 2011 and is relevant for Questions 11 and 12. Accounts Receivable = $50,000 Total Sales = $455,000 Credit policy = 30 days

11. How many days, to the nearest day, did it take Walkers Pty Ltd to collect their accounts receivables in 2011 (on average)? (a) 9 days (b) 18 days (c) 27 days (d) 40 days

12. Which of the following financial objectives is Walkers Pty Ltd aiming to improve by analysing its accounts receivable turnover ratio? (a) Efficiency (b) Solvency (c) Liquidity (d) Profitability

13. Which of the following best matches sources of finance to business purpose? (a) Increasing the bank overdraft to buy a delivery van (b) Applying for a government grant to pay creditors (c) Using retained earnings to expand into new markets (d) Selling accounts receivable to replace furniture and fittings

14. A new CEO of MusicSLife Pty Ltd, Fiona Towey, is determined to consult with stakeholders to achieve specific financial objectives.

What is her leadership style? (a) Autocratic (b) Visionary (c) Pacesetting (d) Participative

15. Which of the following is a key advantage of an industrial conflict?

(a) Expenses will increase and productivity will decrease (b) Community members will become angry and bitter (c) Governments may change relevant policies as a response (d) Workers may get time off work to see their family

16. Which of the following ratios would Harm Philer use to guide him in determining whether his business could meet its financial commitments in the longer term? (a) Accounts receivable turnover (b) Debt to equity (c) Return on owners equity (d) Gross Profit

17. Which of the following legal aspects of employment relations is designed to protect an employee from being sacked due to a physical disability? (a) Unfair dismissal (b) Anti-discrimination (c) Occupational Health and Safety (d) Equal Employment Opportunity

18. Fui Fui Moi Moi has been made redundant.

Which stakeholder is directly responsible for this decision? (a) Employer (b) Employee (c) Employer association (d) Government organisation

19. Modern Awards are part of the current legal framework

Which statement is most correct about Modern Awards? (a) There are no minimum conditions with Modern Awards (b) Modern Awards are common law contracts (c) The system of Modern Awards is more rigid (d) A Modern Award allows for more flexibility

20. Waddington-Carroll Ltd is a global supplier of toilet seats. As an Australian company, they have decided to establish offices in Vietnam (closer to their manufacturing plants). The Senior Management team, with permission from the Board of Directors, are going to employ Australians to manage their operations in Vietnam. Which staffing approach is Waddington-Carroll using?

(a) Ethnocentric (b) Polycentric (c) Geocentric (d) Egocentric

End of Section I
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Student Number Section II Short Answer

40 marks Attempt Questions 21 - 25 Allow 1 hour and 15 minutes for this section Question 21 (6 marks) Marks

A Life Coaching business based in Perth, MapMyFuture Pty Ltd, is looking to expand throughout Australia. They need to raise an additional $10 million to complete their expansion plans.

(a) Outline ONE potential conflict between short-term and long-term financial objectives for MapMyFuture Pty Ltd.

(b) Discuss ONE appropriate external source of finance MapMyFuture Pty Ltd could use to fund their expansion plans. 4

End of Question 21

Question 22 (8 marks)

Marks

ClowninAround Pty Ltd supplies performing clowns and clown equipment for a range of customers, including for childrens parties and high profile corporate events. Demand for their services has continued to grow rapidly in recent years. The business is looking to employ five new clowns on a casual basis, two Marketing Assistants and one Accountant. They are aiming to increase their sales revenue at the same time as keeping their expenses low.

(a) Identify the stage of the processes of human resource management highlighted in the above case study.

(b) With reference to ClowninAround Pty Ltd, explain how the key business functions of human resources and finance could be considered interdependent? 3

(c) How could ClowninAround Pty Ltd exhibit corporate social responsibility in the management of human resources? 4

End of Question 22 10

Question 23 (10 marks) Income Statement for 20/20 Vision Eye Care Pty Ltd Year Ending 2011

Marks

$$ $$ ______________________________________________________________________________ Revenue: Sales 2,000,000 Less: COGS Opening Stock 400, 000 Purchases 500,000 Closing Stock 100,000 GROSS PROFIT Expenses: Less Operating Expenses Administration Expenses Wages Electricity Insurance Repairs Telephone Selling Expenses Advertising Salespersons commission Financial Expenses Interest Leasing NET PROFIT Additional Information: Industry Averages: Gross Profit Ratio = 65% Net Profit Ratio =15% 2010 Result: Gross Profit Ratio = 62% Net Profit Ratio = 12% ??

591,000 100,000 9,000 20,000 30,000

100,000 50,000

55,000 45,000

1,000,000 ??

11

Question 23 (continued)

Marks

(a) Calculate and interpret the net profit ratio for 20/20 Vision Eye Care Pty Ltd for the Year Ending 2011. Show all working. 2

(b) Use comparative ratio analysis to describe 20/20 Vision Eye Care Pty Ltds net profit performance in 2011.

....

(c) Recommend ONE human resource management strategy and ONE profitability management strategy that 20/20 Vision Eye Care Pty Ltd could use to improve their profitability. 6

End of Question 23

12

Question 24 (8 marks) (a) Identify ONE limitation of financial reports.

Marks 1

(b) Briefly distinguish between the cash flow statement and the balance sheet.

(c) Describe ONE main role of the Australian Securities and Investment Commission (ASIC) in regard to their influence over financial management in Australia.

(c) To what extent are ethical issues important to financial reporting?

End of Question 24

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Question 25 (8 marks)

Marks

Rory Cheng established an Accounting firm NumberUp Pty Ltd. As owner and General Manager he is looking to rapidly expand the business and increase the number of employees from 0 to 10. Rory has little experience or expertise in regard to the legal framework of Human Resources. (a) For the benefit of Rory, briefly compare the process of negotiating enterprise/collective agreements with the negotiation of individual contracts.

(b) Describe ONE law that Rory must comply with when employing his new staff.

(c) Why would a workplace dispute resolution strategy be appropriate for NumberUp Pty Ltd?

End of Section II

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Section III 20 Marks Attempt Question 26 Allow about 35 minutes for this section Answer the questions in a writing booklet. Extra writing booklets are available .

In your answer you will be assessed on how well you: demonstrate knowledge and understanding relevant to the question use the information provided communicate using relevant terminology and concepts present a sustained, logical and cohesive response in the form of a business report

Question 26 (20 marks) Anxious4Action Pty Ltd is an Australian company that manufactures and sells skate boards and skate equipment. They have 2 factories and 20 retail outlets around Australia, with their Head Office located at Bondi Beach. The company proudly promotes their products as Australian made. Anxious4Action Pty Ltd also export their products to 13 countries around the world, including USA, England, China, Japan and New Zealand. In recent years, the company has experienced no sales growth in Australia and declining sales of exports to foreign countries. The high Australian dollar, rising labour costs, low staff satisfaction and high staff turnover are key reasons for their declining sales and profitability. Additionally, Anxious4Action Pty Ltd does not have a system in place to reward staff. You have been employed as a consultant to prepare a report for Anxious4Action Pty Ltd. In your report, you should: Outline ONE global financial management strategy Anxious4Action Pty Ltd could use to reduce the risks involved in exporting to international markets. Briefly discuss whether Anxious4Action Pty Ltd should outsource their manufacturing business into the global market. Explain how Anxious4Action Pty Ltd could effectively use the development and maintenance processes of human resource management to enhance staff morale, reduce staff turnover and improve their financial performance.

End of Section III

15

Section IV 20 Marks Attempt either Question 27 or Question 28 Allow about 35 minutes for this section Answer the questions in a writing booklet. Extra writing booklets are available.

In your answer you will be assessed on how well you: demonstrate knowledge and understanding relevant to the question use relevant business case study/studies communicate using relevant business terminology and concepts present a sustained, logical and cohesive response

Question 27 (20 marks) How could understanding the key influences on human resources increase the effectiveness of human resource management?

OR

Question 28 (20 marks) How could understanding the influences on financial management lead to more effective cash flow management and working capital management strategies?

End of Paper

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