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OCR f292 case study

Discussion in 'Business studies' started by glynmanton, Mar 22, 2011.

  1. glynmanton

    glynmanton New commenter

    Interesting find. I have not spent much time on this- but it would seem that
    Total share equity £4,750 £5m total equity
    Harriet and family £750,000 16%

    Loan (Small loan guarantee) £250,000
    Means Equity partner is £4m 84%

    This is not insignificant but why would Harriet give up 84%?

    Cash flow is puzzling - the interest charges do not relate to increases in overdraft and if taken as a percentage of the loan would give about a 50% interest rate - My assumption has to be that the equity partner has given a part loan and part equity say $750,000 so they are 50/50- that would bring loans to 3.5 million and making an interest rate of 4%

    "Up to now, JKL has been able to
    rely on the initial start-up capital and its equity partner?s ability to secure a substantial overdraft."

    I am puzzled and now wondering if OCR have thrown a few curved balls- If teachers are not seeing how its funded how could students independently without us spoon feeding?

    Anyway if you want to share thoughts or planning email me!
    glynmanton@ntlworld.com
    (City of Norwich School)
     
  2. I agree that the case study is vague about the legal side of the business as it is clear the equity partner has put in 80% of the finance (£4m of the £5M). However the cash flow will not reflect this in the interest as an equity partner will not be due interest as they are not a lender - it is equity.
    As this is a limited company you have to assume that the shareholding reflects the minority stake of the equity partner but this still does not work with the information we have been given.
    I looked at it and put it in the context of the syllabus - where the legal aspect is covered in unit 1. I have focused my groups attention on what a venture capitalist is and the effect this would have on the business.
    I will, however, be keeping an eye on the exam paper and if they ask a question that uses this vague information i may well be straight on the phone complaining!
     
  3. kenickie

    kenickie New commenter

    I do wonder sometimes if we look in to it too much.
    They cant really ask direct questions on F291 content - so there will be no questions on sources of finance etc.

    I think the finance will be a straightforward "How can they improve the cashflow?" (put up prices, more spaces in the centres etc etc all hinted at in the case study) or "How useful is a cashflow forecast when deciding on........"

    I think, perhaps that we are over thinking things.
     
  4. I agree... However, I am becoming increasingly frustrated with poor case studies. The problem always comes with the accounts! I think they base the 'back stories' on old courseworks that were completed before the syllabus revamp.. then they tweak or simply make up the information. The accounting information provided rarely makes complete sense so we and eventually the pupils are forever second guessing what they mean.
    I still don't know why exam boards persist on pre-release materials..? why not have a simplified version of the case study in the exam and the pupils do it closed book...
    I am finding the pre-release for the GCSE even more frustrating... pupils are already bored of it and I have 6 weeks to go! I quite liked the old spec with a higher and a foundation paper... lessons were easier to plan and the pupils needed to learn concepts rather then rely on teachers to spot exam topics..
    F297 isn't brilliant either....

    moan over.
     

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