The Reports

Question 1

What is the reason for a classified balance sheet?

Answer 1

More understandable, helpful for decision making

Question 2

Strategies for increasing revenue x5

Answer 2

• Change selling prices
• Market strategically and effectively
• Implement strategies to manage inventory
• Move to a better location
• Improve customer service

Question 3

Strategies to control expenses x4, x5

Answer 3

• Change inventory management practices
• Change staff management practices
• Change non-current asset management practices
• Consider non-financial information:
  o Number of competitors in the area
  o Number of customers in the area
  o Number of repeat sales
  o Number of sale returns
  o Number of customer complaints

Question 4

Uses of the Income Statement x3

Answer 4

• Assess the firm’s performance against its revenue and expense targets
• Plan for future trading activities
• Calculate financial indicators that support analysis and interpretation

Question 5

Uses of the cash flow statement x3

Answer 5

• Assess the firm’s performance against its cash targets
• Plan for future cash activities
• Calculate financial indicators to support analysis and interpretation

Question 6

Strategies to generate cash x3

Answer 6

• Increase sales revenue
• Implement strategies to manage Accounts Receivable
• Use loans and capital contributions to finance the purchase of non-current assets

Question 7

Strategies to minimise cash outflows x5

Answer 7

• Reduce expenses
• Utilise the credit terms offered by suppliers
• Reduce cash drawings or loan replacements
• Defer purchases of non-current assets
• Organise a bank overdraft