Business profit and profitability ratios

The data below applies to Bromley Apples Ltd for 2023–2024.

What is Bromley Apples Ltd’s gross profit for 2023–2024?

Read the information below and then answer the questions that follow.

Biggs Ltd

Biggs Ltd operates in the snack food market, selling crisps, nuts and other savoury products. Potatoes are a key ingredient in its snacks. The price of potatoes has risen by 35% over the last two years.

The company is one of six firms who dominate a market that has been growing strongly for ten years. The market growth is largely due to the development of new snacks designed for children. However, Biggs Ltd’s market share has been falling since 2019.

Biggs Ltd plans to launch a completely new range of products in 2024. It will promote this by sponsoring a major televised sporting competition which has children and families as its audience.

Appendix A Extract from Biggs Ltd’s recent financial statements

Appendix B Labour productivity for Biggs Ltd and the snack food industry average (shown as an index number, base year = 2017)

Appendix C Marketing expenditure as a percentage of revenue, 2020–2024*

* 2024 based on Biggs Ltd’s forecast.

Appendix D Results of market research conducted with families on Biggs Ltd’s new

Source: Data from 27 interviews with families, conducted by Biggs Ltd in 2021.

Appendix E Percentage of snack products bought and consumed by different

Results from a recent survey of 3000 respondents conducted by an independent market research firm.

Using Appendix A, calculate Biggs Ltd’s payables days ratio for 2023.

Using the information provided, explain one reason why Biggs Ltd’s gross profit margin for 2023 fell to 46.9%.

Analyse how the changes in Biggs Ltd’s labour productivity, shown in Appendix B, may cause its market share to fall.

In 2024, Biggs Ltd became the sponsor of a major televised sporting competition that attracts a wide range of ages and is popular with families.

With reference to the information provided, evaluate whether Biggs Ltd’s decision to promote its new product range in this way is a good idea.

Statement 1: ‘An increase in rent paid by a business will have no effect on its gross profit.’

Statement 2: ‘An increase in tax on a business’s profit will have no effect on its profit for the year.’

Read statements 1 and 2 and select the correct option from the following:

Read the information below and then answer the questions that follow.

Bell Ltd

Bell Ltd is a UK-based food manufacturer with 27 branded products in three main markets:

sweets

snacks

drinks.

The company has been very successful over many years, increasing its market share in each market. It has responded to market changes by investing in the development of new products such as low-sugar and vegetarian ranges. It monitors the sales and costs associated with each of its brands.

100% of shares in Bell Ltd are owned by four members of the Bell family who also have management roles in the business. The owners feel long-term strategic decision making at the company is more effective than if it was a public limited company.

Bell Ltd actively manages the trade credit offered to retailers who buy its products, such as chasing any overdue payments and minimising the period of credit it offers to them. By building long-term relationships with suppliers, it has secured favourable credit terms from them.

Speckles is produced by Bell Ltd and used to be a leading brand of sweets in the UK. In terms of the Boston Matrix, Speckles is now a ‘dog’. It was recently announced that Speckles would be discontinued. A social media campaign against this decision claimed that Speckles was an iconic brand from people’s childhoods and should be saved.

Table 1 Financial data for the Speckles brand

Calculate the Gross Profit Margin for Speckles in 2020.

Analyse how Bell Ltd’s cash flow is improved by the way it manages its payables and receivables.

Analyse how the ownership structure of Bell Ltd might have contributed to the success of its strategic decision making.

Should businesses always stop the production of products classified as ‘dogs’ in the Boston Matrix?

Justify your view.

The table below shows data from a company’s accounts.

The company’s operating profit is