| Date | May 2022 | Marks available | 5 | Reference code | 22M.2.SL.TZ0.2 |
| Level | Standard level | Paper | Paper 2 | Time zone | Time zone 0 |
| Command term | Construct | Question number | 2 | Adapted from | N/A |
Question
Ritev Enterprises (RE)
Ritev Enterprises (RE) is a public limited company that owns a chain of 20 gas (petrol) stations. Next year, RE plans to modernize its gas stations by installing self-service pumps.
Table 2 provides selected financial data for RE from:
- the profit and loss account for year ending 31 May 2021
- the balance sheet as of 31 December 2021.
Table 2: Selected financial data for RE
The finance director is concerned about the trend in consumer preference for electric cars and the potential impact of increased numbers of electric cars on RE.
State two appropriate external sources of finance that RE could use to modernize its gas stations.
Construct a fully labelled balance sheet for RE as of 31 December 2021.
Calculate RE’s gross profit margin (no working required).
Markscheme
Award [1] for each appropriate source of finance up to a maximum of [2].
Appropriate external sources include:
- share (capital)
- loan (capital) / bank loans
- retained profit
- debentures
- venture capital
- leasing
- equity finance.
Do not award inappropriate sources such as:
- trade credit
- overdrafts
- grants
- subsidies
- debt factoring
- hire purchase
- business angels
- partners
- entrepreneur.
N.B. if the candidate does not follow the IB prescribed format award a maximum of [3].
N.B. candidates should not be penalized for: omitting the row “Long-term liabilities (debt)”, or for writing “retained profit” omitting the word “accumulated”.
Award [1] if the candidate conveys some idea of what a balance sheet is.
Award [2] if the candidate constructs a largely recognizable balance sheet, but it does not balance, or it has two major problems of classification.
Award [3] for a largely accurate balance sheet that correctly balances. (There could be one misclassification.)
Award [4] if the candidate constructs an accurate balance sheet (that balances) according to the IB prescribed format.
Award [5] if the candidate constructs an accurate balance sheet (that balances) according to the IB prescribed format and the balance sheet is dated.
$100 000m – 80 000m = $20 000m
= 20 %
Correct answer = 20 % or .2
If a candidate does not express the gross profit margin (GPM) as a percentage or as a decimal, the answer is incorrect.
Award [1] for the correct answer (no working required).
Examiners report
Most candidates could name at least one appropriate external source of finance.
As is usually the case with construction of a balance sheet, candidates tended to do very well (4-5 marks) or poorly (0-1 mark).
Most, but certainly not all, correctly calculated the gross profit margin.
