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CAIE IGCSE Business Studies 5 Financial Information and Decisions Questions

Use this Financial Information and Decisions hub to connect finance sources, cash-flow data, accounts and ratio interpretation in cases.

Syllabus
2027–2029
Course
Business 0264

Covered syllabus points

5.1. Business finance5.2. Cash flow forecast5.3. Profit and loss5.4. Statement of financial position5.5. Analysis of accounts

Question 1

[Maximum number: 8]

Explain two reasons why working capital is important to LB.
Reason 1:

Explanation:

Reason 2:

Explanation:

Question 2

[Maximum number: 6]

LFK is a coal-mining business. It has 135 employees who are all provided with training. After the dismissal of one of LFK's employees there is a job vacancy for a new supervisor. External recruitment will be used. The Managing Director is preparing a cash flow forecast for LFK. An extract is shown in Table 3.1.

Table 3.1

Table 3.1

Question (a)

(a)

Calculate the value of X and Y.

X:

Y:

[ 2 ]

Question (b)

(b)

Identify four reasons why a cash flow forecast might be useful to a business.

Reason 1:

Reason 2:
Reason 3:
Reason 4:

[ 4 ]

Question 3

[Maximum number: 12]

KPX manufactures computers. The business imports 60% of its raw materials. The Operations Director is considering ways to use lean production methods in KPX's factory. The Finance Director is reviewing KPX's financial data to calculate the value of its expenses. An extract is shown in Table 1.1.

Table 1.1

Table 1.1

Question (a)

(a)

Calculate KPX's expenses in 2024. Show your working.

Working:

Final answer:

[ 2 ]

Question (b)

(b)

Outline two ways KPX's Finance Director could use the financial data in Table 1.1.

Way 1:

Way 2:

[ 4 ]

Question (c)

(c)

Explain two reasons why profit is important for a business. Which reason is likely to be the most important? Justify your answer.

[ 6 ]

Question 4

[Maximum number: 6]

HRO manufactures children's toys. It is a private limited company. The main objective of HRO 's shareholders is to increase profit. This might conflict with the objectives of other stakeholder groups, including its 30 suppliers. HRO's Managing Director knows that market research can help when making marketing decisions. The Finance Director is preparing HRO's statement of financial position. An extract is shown in Table 3.1.

Table 3.1

Table 3.1

Question (a)

(a)

Define 'non-current assets'.

[ 2 ]

Question (b)

(b)

State whether each of the following would be classified as a current asset or as a current liability.

Trade receivables:
Trade payables:
Overdraft:
Inventory:

[ 4 ]
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