yellow sheet calculations

Question 1

PED

Answer 1

1. If there are increased substitutes
2. Increase price elasticity (become more price elastic)
3. Customers less loyal to the brand
4. Therefore, if they increase the prices there will be a significant fall in demand
5. Pressure to keep prices low
6. Leading to reduced revenue
7. Leading to reduced gross profit
8. Leading to reduced operating profit
9. Leading to reduced retained profit
10. Leading to reduced total equity

Question 2

price inelasticity

Answer 2

1. Positive publicity developing a stronger brand image
2. This will differentiate from its’ competitors
3. Consumers more loyal to the brand
4. Leading to their products becoming more price inelastic
5. Therefore, they can charge higher prices for their products without demand falling significantly
6. Leading to increased revenue
7. Leading to increased gross profit margin
8. Increased operating profit, increased retained profit increasing total equity

Question 3

liquidity

Answer 3

1.Increased cash outflows there will be a lower net cash flow

2. This will lead to lower cash reserves
3. Reduced current assets
4. Reduced current ratio
5. Putting the business at risk as they may not be able to keep up with payments for current liabilities.
6. Leading to the sale of non-current assets (to pay current liabilities)
7. Disruption to business operations

Question 4

income sheet

Answer 4

1.
Increased sales

2. Leads to increased gross profit
3. Leading to increased operating profit

Increasing net profit

5. Which can be retained
6. And invested in…

Question 5

marketing eos

Answer 5

1. Increase in sales
2. Increase in sales volume
3. Meaning the fixed costs of marketing e.g
   Advertising
4. Can be spread over more units
5. Lower unit fixed costs
6. Making the advertising more affordable so can do more of it
7. Increased brand awareness
8. Increase sales
9. Increase gross profit
10. Increase operating profit
11. Increase ROCE

Question 6

purchasing eos

Answer 6

1. Increased sales volume
2. Increase orders to suppliers
3. Discount for bulk buying
4. Lower unit variable costs
5. Higher gross profit margin
6. Increase gross profit
7. Increase operating profit
8. Increase retained profit
9. Increase total equity