Practise Edexcel Business questions on cash flow, budgets and financial planning, interpreting figures before explaining liquidity risks and management decisions.
Source for use with Section B
Extract C
About Skechers
Skechers is a global footwear company that designs and develops shoes for men, women and children. It sells its products online and in more than 2,700 shops in 170 countries through its established distribution channels. The annual sales revenue of the business increased from $3.52bn in 2016 to $4.16bn in 2017.
Skechers' marketing department uses both primary and secondary market research. Focus groups and interviews are used during the design stage to collect opinions on new shoes before they are launched onto the market. Focus groups are also used to gain feedback on the performance and comfort of existing styles of shoes. Since 1992 when it launched its first shoe, the company has diversified into several new lines, targeting different market segments and different activities.
The range is updated regularly and includes shoes for walking, work and casual wear. The portfolio includes 3,000 different styles of footwear for all ages that offer quality and comfort. Its best-selling shoe is the Go-Walk brand, sold globally. More recently the company has designed and sold shoes for athletes and is now competing with companies such as Nike and Adidas.
Organisation of Skechers
Although Skechers has offices and shops globally it has maintained a centralised organisational structure. At the corporate headquarters in California, USA, Skechers research, design, and develop the shoes as well as controlling global marketing campaigns and operations. Offices based in South America, Europe and Asia oversee the regional operations.
David Weinberg is the Chief Operating Officer (COO) based in the USA head office. He is responsible for the day-to-day operations. These include planning Skechers policies and objectives and developing financial and distribution strategies to expand the business.
Extract C
About Skechers
Skechers is a global footwear company that designs and develops shoes for men, women and children. It sells its products online and in more than 2,700 shops in 170 countries through its established distribution channels. The annual sales revenue of the business increased from $3.52bn in 2016 to $4.16bn in 2017.
Skechers' marketing department uses both primary and secondary market research. Focus groups and interviews are used during the design stage to collect opinions on new shoes before they are launched onto the market. Focus groups are also used to gain feedback on the performance and comfort of existing styles of shoes. Since 1992 when it launched its first shoe, the company has diversified into several new lines, targeting different market segments and different activities.
The range is updated regularly and includes shoes for walking, work and casual wear. The portfolio includes 3,000 different styles of footwear for all ages that offer quality and comfort. Its best-selling shoe is the Go-Walk brand, sold globally. More recently the company has designed and sold shoes for athletes and is now competing with companies such as Nike and Adidas.
Organisation of Skechers
Although Skechers has offices and shops globally it has maintained a centralised organisational structure. At the corporate headquarters in California, USA, Skechers research, design, and develop the shoes as well as controlling global marketing campaigns and operations. Offices based in South America, Europe and Asia oversee the regional operations.
David Weinberg is the Chief Operating Officer (COO) based in the USA head office. He is responsible for the day-to-day operations. These include planning Skechers policies and objectives and developing financial and distribution strategies to expand the business.
Using Extract C, calculate to 2 decimal places, the percentage change in sales revenue for Skechers between 2016 and 2017. You are advised to show your working.
Extract C Darwin Film Society and the Deckchair cinema Darwin Film Society (DFS) is a social enterprise that helps community groups and charitable organisations to show films for fundraising events. It is mainly run by volunteers but does have a small number of salaried employees who oversee the running of the film society throughout the year. In addition to the fundraising events, DFS set up the Deckchair cinema in 1994. The Deckchair cinema shows films outdoors from April until November each year. The atmosphere is very relaxed, with 250 deckchairs for customers to use. The skies are usually cloud-free and the stars make a great backdrop for the screen. DFS has a growing membership of more than 1,000 people. Most of DFS's revenue comes from ticket sales and film society members who pay Aus$75 per year. Membership includes free entry to four screenings at the Deckchair cinema, reduced ticket prices for further screenings and priority access to any DFS event. Most membership fees are paid in April and May and are credit sales. Between December and March, the Deckchair cinema is closed and there are no screenings, charitable or special events. However, all other cash outflows need to be paid during these months. Since 2012, environmental protection legislation in Darwin states that all drinks bottles must be labelled to show that Aus$0.10 will be refunded when the container is returned to an official collection point. As part of its ethical profile, DFS provides recycling bins at the Deckchair cinema, where bottles can be collected for this Container Deposit Scheme (CDS). All money raised supports local charities. In addition, bottled water is no longer sold at the cinema to further reduce waste. Instead, customers are invited to enjoy filtered water free of charge from the sales kiosk.
Extract D Cash flow forecast for Darwin Film Society (DFS) April-July 2021
Extract D Cash flow forecast for Darwin Film Society (DFS) April-July 2021
Using the data in Extract D, calculate, to two decimal places, fixed costs for Darwin Film Society (DFS) as a percentage of total cash outflow for May 2021. You are advised to show your working.
Extract C Darwin Film Society and the Deckchair cinema Darwin Film Society (DFS) is a social enterprise that helps community groups and charitable organisations to show films for fundraising events. It is mainly run by volunteers but does have a small number of salaried employees who oversee the running of the film society throughout the year. In addition to the fundraising events, DFS set up the Deckchair cinema in 1994. The Deckchair cinema shows films outdoors from April until November each year. The atmosphere is very relaxed, with 250 deckchairs for customers to use. The skies are usually cloud-free and the stars make a great backdrop for the screen. DFS has a growing membership of more than 1,000 people. Most of DFS's revenue comes from ticket sales and film society members who pay Aus$75 per year. Membership includes free entry to four screenings at the Deckchair cinema, reduced ticket prices for further screenings and priority access to any DFS event. Most membership fees are paid in April and May and are credit sales. Between December and March, the Deckchair cinema is closed and there are no screenings, charitable or special events. However, all other cash outflows need to be paid during these months. Since 2012, environmental protection legislation in Darwin states that all drinks bottles must be labelled to show that Aus$0.10 will be refunded when the container is returned to an official collection point. As part of its ethical profile, DFS provides recycling bins at the Deckchair cinema, where bottles can be collected for this Container Deposit Scheme (CDS). All money raised supports local charities. In addition, bottled water is no longer sold at the cinema to further reduce waste. Instead, customers are invited to enjoy filtered water free of charge from the sales kiosk.
Using the data in Extract D, analyse two possible problems for Darwin Film Society (DFS) from its cash flow forecast from April–July 2021. (6)
Sources for use with Extract A Bee Hive Candles US-based business, Bee Hive Candles (BHC) produces candles made from 100% pure beeswax. All candles are handmade using beeswax from US bees. Jennifer Wesolowski started the business in 2000, using personal savings. She decided to change from making candles as a hobby to setting it up as a business. A wide range of candles are offered but by using 100% beeswax, all candles are environmentally friendly. Unlike typical paraffin candles, they are biodegradable and produce no harmful toxins. They burn for longer, meaning better value for money. Although still a small business, BHC is growing. This is due to increasing consumer awareness of environmental issues and positive feedback on social media platforms. Jennifer remains dedicated to making quality candles and offering outstanding customer service. Newsletters are emailed to existing customers to advise of new products and offers. BHC charges $9.95 to send its candles to customers all over the US but at the moment does not accept orders from outside the US. Prices of the candles range from $6.95 to over $100 for a large pack of candles. The best-selling product is the pillar candle, priced at $17.95. It is popular because of its relatively low price and burns for approximately 50 hours. Extract B Candle sales in the US – some figures • The US has the largest share of customers buying candles in the world. • In the US 35% of all candles are sold online and this is increasing. • Beeswax candles account for only 2% of all candle sales in the US market; this figure is increasing. • Paraffin candles are currently the most popular type of candle, with nearly 40% of the market. This is followed by soy wax, palm wax and beeswax.
Extract A Bee Hive Candles US-based business, Bee Hive Candles (BHC) produces candles made from 100% pure beeswax. All candles are handmade using beeswax from US bees. Jennifer Wesolowski started the business in 2000, using personal savings. She decided to change from making candles as a hobby to setting it up as a business. A wide range of candles are offered but by using 100% beeswax, all candles are environmentally friendly. Unlike typical paraffin candles, they are biodegradable and produce no harmful toxins. They burn for longer, meaning better value for money. Although still a small business, BHC is growing. This is due to increasing consumer awareness of environmental issues and positive feedback on social media platforms. Jennifer remains dedicated to making quality candles and offering outstanding customer service. Newsletters are emailed to existing customers to advise of new products and offers. BHC charges $9.95 to send its candles to customers all over the US but at the moment does not accept orders from outside the US. Prices of the candles range from $6.95 to over $100 for a large pack of candles. The best-selling product is the pillar candle, priced at $17.95. It is popular because of its relatively low price and burns for approximately 50 hours.
The variable cost of the pillar candle for Bee Hive Candles (BHC) has increased from
$4.70 to $5.50.
Using the data in Extract A, explain one way the change in the contribution of the
pillar candle may affect BHC's break-even point.
Analyse two reasons why B H C 's actual sales may be higher than the sales
forecasts.