| Date | May 2018 | Marks available | 1 | Reference code | 18M.2.SL.TZ0.2 |
| Level | Standard level | Paper | Paper 2 | Time zone | Time zone 0 |
| Command term | Calculate | Question number | 2 | Adapted from | N/A |
Question
Visionary Toys (VT)
Visionary Toys (VT) produces highly innovative toys for children. VT began operation in January 2017 and its unique selling point/proposition (USP) is producing toy parts with a 3D printer. The financial director presented financial information for VT at the end of 2017. He was concerned about VT’s liquidity.
Table 1: Revenue and expense information for the year 2017 and balance sheet items at 31 December 2017
[Source: © International Baccalaureate Organization 2018]
Define the term unique selling point/proposition (USP).
Construct a fully labelled balance sheet for VT for the end of 2017.
Calculate the acid test (quick) ratio for VT for 2018.
Explain one way VT could improve its liquidity.
Markscheme
A unique selling point is any aspect of the organization, brand or product that enables differentiation in consumers’ minds from the competitors.
N.B. no application required. Do not credit examples.
Award [1] for a basic definition that conveys partial knowledge and understanding.
Award [2] for a full definition that conveys knowledge and understanding similar to the answer above.
Balance sheet for VT for the end of 2017:
Accurate presentation refers to the correct heading, sub-heading and to the inclusion of all and only the relevant figures.
Allow OFR.
[0]
The B/S does not reach a standard described below.
[1–2]
The B/S is not accurately constructed, and/or the calculations within and between the various components are not presented or largely incorrect. However, there is limited evidence of a general understanding of the format
[3–4]
The principal elements of the B/S are constructed, but may not be entirely accurate. The calculations under each heading/component/part are largely correct.
Allow up to two mistakes in calculations and/or presentation for [3].
Allow for either one error in calculation or one error in presentation [4].
For an accurately constructed B/S with incorrect calculations, award up to a maximum of [3].
Allow OFR.
For example, if one irrelevant figure that belongs to the P/L account is added, obviously the rest will not match.
[5]
The B/S is accurately constructed in the expected IBO format. All the relevant headings of each component/ parts are used and correctly classified. Do not penalise for internal order of classification. All and only the relevant figures are presented. No extra irrelevant figures that belong to the P/L are included.
Deduct [1] for one omission including the overall heading provided the B/S is accurately balanced.
N.B. If the candidate did not follow the IBO format award up to [3] marks.
Current assets: $9000
Stock: $4500
Current liabilities: $7 500
Acid test ratio:
Apply OFR where applicable. Candidates are not required to show workings.
Award [1] for a correct answer.
Ways VT could improve liquidity include:
• attempt to operate with a lower re-order level of stock
• sell fixed assets and lease long-term assets
• pay less in dividends
• raise capital, either more share capital or long-term debt.
Accept any other acceptable and relevant means to improve liquidity.
If a candidate proposes negotiating longer trade terms with VT’s creditors, award [1]. This response is theoretically correct if all of the funds generated by the longer payment terms are used for no other purpose than building cash. Thus, while theoretically correct (the ATR would go up), it is not a particularly useful approach to the problem.
N.B. The question provides no real opportunity for application and thus application is not expected. However, a response must be relevant to receive full marks.
