IB Business Management SL 3.4.2 Final Accounts Questions

Practise 3.4.2 Final accounts in IB Business Management SL by connecting concepts to case evidence and decisions.

Syllabus
First assessment 2024
Course
Business management SL
Level
SL

Exam points

  • Prepare and interpret profit and loss accounts and balance sheets
  • Final accounts summarize financial performance and financial position

IB Business Management SL 3.4.2 Final Accounts Questions question 1

[Maximum number: 2]

Ace Industries (AI)
Ace Industries ( A I ) manufactures plastic containers, mostly for the soft and fruit juice industries. The operations management department uses flow production for its standard-sized products and batch production for its customized products.
Al's sales are growing rapidly. It currently has a 6 % share of the plastic container market. However, it has recently struggled to meet customized orders on time. Some customers have complained about product quality. Currently, A I is organized by region, which allows the company to have strong relationships with customers, who feel that A I knows them and cares about their interests. The human resource department is proposing restructuring the organization by function. Not everyone at A I agrees with this change. Many think that the problems of late delivery and poor quality could be solved through greater delegation.
Lloyd Rinnegrat, Chief Financial Officer, has suggested that Al's management think more deeply about their rapid growth. Except Lloyd, most people at A I believe that rapidly growing sales are good - that by increasing its market share A I will, in the long run, benefit by being a large organization. However, Lloyd argues that being a small organization has many merits, as shown by the changes in Al's recent gross profit margins and net profit margins.

Table 1: Selected financial data for \(\boldsymbol{A

Table 1: Selected financial data for \(\boldsymbol{A

The marketing department has predicted that the soft and fruit juice industries are moving away from major mass-produced drinks and toward niche products, such as exotic fruit drinks and speciality beverages for very particular markets.

Calculate:

the difference in Al's net profit before interest and tax between 2018 and 2019 (show all your working).

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