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Money Bag

Unit 3 - Finance & accounts - QB

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Chart Increasing

Unit 1 - Introduction To Business Management - QB

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Briefcase

Unit 2 - Human Resource Management - QB

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Direct Hit

Unit 4 - Marketing - QB

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Factory

Unit 5 - Operations management - QB

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Bar-Chart

Unit 6 - Assessment

WAW - A big player in Canada&#39;s residential construction industry, known for manufacturing energy-efficient windows. But there&#39;s a twist! Due to a housing crisis, sales have fallen, and they&#39;re thinking of shaking things up.

<ul>
	<li>Widely recognized in Canada. 🍁</li>
	<li>Main product: Standard-sized windows. 🪟</li>
	<li>Offers trade credit (Pay within 30 days). ⏳</li>
	<li>Sales hit due to a housing crisis. 📉</li>
</ul>

🌍 Real-world example: Imagine if Apple&#39;s iPhone sales suddenly dropped because people couldn&#39;t afford phones. They might think of introducing a budget-friendly model or offer some innovative solutions to boost sales.

<ul>
	<li>Custom-sized windows, not standard.</li>
	<li>Profitable if at least 100 windows per order. 💰</li>
	<li>Payment: 50% upfront, 50% on delivery. 💵</li>
	<li>Catch? They&#39;d need a new employee to plan these special orders. 🙋&zwj;♂️</li>
	<li>Uncertainty looms: Is this enough to improve finances?</li>
</ul>

🌍 Real-world example: Consider if Starbucks, known for its standardized coffee menus, decided to introduce a &quot;make your own blend&quot; option. While it might appeal to some, it requires additional resources and isn&#39;t a guaranteed success.

🔍 Important Calculations (using data from Tables 1 &amp; 2): a. Long-term loan (X): We&#39;d use given figures to determine the long-term liability of WAW.

<ul>
	<li>&nbsp;Current Ratio: This shows WAW&#39;s ability to pay its short-term debts. The ideal is usually 2:1. 📊</li>
	<li>&nbsp;Acid Test (Quick) Ratio: A stricter measure than the current ratio. It excludes inventory, giving a clearer picture of immediate liquidity.</li>
	<li>&nbsp;Profit Before Interest and Tax (PBIT): This tells us the profit earned before slicing off interest and tax amounts.</li>
	<li>&nbsp;Gross Profit Margin: Reveals the percentage of sales exceeding the cost of goods sold. A high percentage = Healthy profit!</li>
	<li>&nbsp;Profit Margin: Indicates what portion of sales is left after all costs.</li>
	<li>&nbsp;Return on Capital Employed (ROCE): A key profitability ratio, shows how well capital is being used to generate returns.</li>
</ul>

🌍 Real-world example: Think of this section as a health check-up. Just as doctors use metrics like blood pressure and heart rate to understand our health, businesses use ratios to understand their financial health.

To address this, consider

Potential Profitability: With the requirement of a minimum of 100 windows, is the market demand there?

<ul>
	<li>Cash Flow Impact: Upfront payments can improve cash flow, but is it sustainable?</li>
	<li>Additional Costs: That new employee&#39;s salary and any other overheads linked to special orders.</li>
	<li>Brand Reputation: Will WAW still be seen as a reliable, quality manufacturer if they start customizing?</li>
</ul>

🌍 Real-world example: It&#39;s like McDonald&#39;s, known for quick standard meals, considering a gourmet burger menu. They&#39;d think about the potential demand, increased preparation time, cost, and how it affects their fast-food image. 
&nbsp;

🚀 Pro Tip: When answering practice questions like these, always break the information down into smaller chunks, make your calculations clearly, and give real-world examples for better understanding and context.

&nbsp;

Happy studying! 📚

Master WAW's Financial Analysis: Tips & Insights

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Standard Level

Business Management SL

Unit 3 - Finance & accounts - QB

Master WAW's Financial Analysis: Tips & Insights

Table of content

Setting the scene 🌆

WAW's current situation

WAW's new proposal - special order windows

Unlock the Full Content!

Unit 3 - Finance & accounts - QB

Master WAW's Financial Analysis: Tips & Insights

Table of content

Setting the scene 🌆

WAW's current situation

WAW's new proposal - special order windows

Unlock the Full Content!