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LL Drinks is a public limited company which produces a variety of fruit drinks. The drinks are produced and sold in many different countries across the world. LL Drinks is a successful company, but the directors want to increase its share of the fruit drinks market around the world. The following two ways of increasing market share have been identified. Option 1: Increase sales of its most popular brand of drinks by starting to sell it in 10 more countries. The investment required to launch the drinks into these new markets is estimated to be $50m. This includes market research, marketing campaigns and building factories to produce the fruit drinks in these countries. Option 2: Take over a competitor which sells a different range of drinks. The cost of buying all the shares to take over this competitor is estimated to be $100m.   APPENDIX 1 Summary of Financial Information LL Drinks existing business 2020                                                             $m Capital employed 400 Sales revenue 800 Gross profit 600 Net profit 100     Option 1 forecasts                                                                     $m per year Sales revenue from 10 countries 200 Cost of sales 80 Operating expenses 110     Option 2 forecasts Sales revenue from taking over the competitor 400 Cost of sales 120 Operating expenses 220    

2b. Discuss the benefits and limitations of ratio analysis   (12)

BB Boat Tours was set up 15 years ago as a partnership between three brothers, Abdul, Bruce and Carlos. The business owns three boats and it takes tourists for day boat trips out to sea. The business offers three types of trips: • to look at the dolphins and other sea life (used mainly by foreign tourists) • to go fishing with skilled local fishermen (used mainly by local tourists) • to go diving with qualified diving instructors (used mainly by foreign tourists). All the boats owned by the business are of good quality. Food and drinks are provided for the tourists throughout the day. The business grew rapidly and made good profits, with the boats usually fully booked. However, last year the business made a loss as the boats were only half full each day. The problem for the brothers is that they do not have much money and are thinking of selling one of the boats. Carlos says: ‘We need to offer only two types of boat trips so we can reduce expenses’. Abdul thinks they should make some of their employees redundant. They need different skilled employees for each type of trip and he thinks they employ too many people. The foreign tourists come mainly from the European Union where the euro is the currency used. BB Boat Tours buys most of its boats and equipment from countries in the European Union. The local currency has been depreciating against the euro.   APPENDIX 1 Cost and revenue information for BB Tours (when the boats are half full) Type of day trip Price of trip per person Number of passengers per day trip Variable cost per passenger (food, equipment hire, wages of employees) Dolphin watching $20 20    $10 Fishing $30 15    $15 Diving $60 10    $30         The fixed costs for each boat are $300 per day   APPENDIX 2 (Government Economic Data)   Year Number of foreign tourists 2017 10 000 2018 14 000 2019 18 000 2020 20 000     Year Inflation (%) Unemployment(%) Interest rates 2017 3 1.8 6.2 2018 3.8 2 4 2019 5 3 3 2020 8 5 2  

1a. The brothers want to reduce the size of the business to reduce their losses. Using the information in Appendix 1, calculate the net profit per day for each of the three boat tours. Using these results and other information from the case, recommend which boat tour they should stop operating. Justify your answer. (12)

2a. Using the information provided above, consider the two options for increasing the market share of LL Drinks. Recommend which one of the two options the directors should choose by calculating the three profitability ratios, Gross profit margin ,Net profit margin,ROCE (12)

3. The following terms  will be found in a statement of financial position .Explain each of the terms and give an example of each term . Non current assets Current assets Non current liabilities Current liabilities (8)

Solve the equation.24t – 50 = 9t – 5

Decide whether the equation is conditional, an identity, or a contradiction. Give the solution set.4(18t + 9) = 12(4t – 3)

Solve the inequality. Give the solution set in both interval and graph forms.y + 1 < -10

Graph the solution set of the inequality and write it in interval notation.-5x ≥ 20