Business Studies Essay

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Cambridge International Examinations Cambridge International General Certificate of Secondary Education BUSINESS STUDIES Paper 1 SPECIMEN PAPER 0450/01 For Examination from 2015 1 hour 30 minutes Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name in the spaces at the top of this page. Write in dark blue or black pen. You may use an HB pencil for any diagrams, graphs or rough working. Do not use staples, paper clips, glue or correction fluid. Answer all questions. The businesses described in this question paper are entirely fictitious. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. The total number of marks for this paper is 80. The syllabus is approved for use in England, Wales and Northern Ireland as a Cambridge International Level 1/Level 2 Certificate. This document consists of 9 printed pages and 1 blank page. © UCLES 2012 [Turn over 2 1 AB is a large business providing transport services in country Z. The economy of country Z is in recession. Fig. 1 shows the market distribution of AB’s sales in 2011. AB has borrowed $200m from banks. Table 1 shows a summary of AB’s financial data in 2011. AB has received a takeover bid from a rival business based in another country. Fig. 1: Market distribution of sales (2011) Domestic sales Export sales Table 1: Financial data (2011) Revenue Profit Profit margin Return on Capital Employed $800m $80m 10% 5% (a) What is meant by ‘Return on Capital Employed’? [2] (b) Calculate the value of AB’s revenue from domestic sales in 2011. [2] (c) Identify and explain two disadvantages to AB of borrowing a lot of money from banks. Disadvantage 1: Explanation: Disadvantage 2:

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