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UNIT ASSESSMENT

Edexcel
A Level
Business
Unit Assessment
This Unit Assessment covers:

2.1 Raising finance

2.2 Financial planning
2.3 Managing finance
h 1 hour
h The maximum mark for this Unit
Assessment is 50

Name

Centre Name

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Edexcel A Level Business

Unit Assessment
ANSWER ALL QUESTIONS

Extract A
Lease 2 Learn
Serial entrepreneur, venture capitalist and Dragons’ Den star Peter Jones has named IT equipment
hire service Lease 2 Learn winners of Tycoon in Schools 2016– the national enterprise competition for
schoolchildren, beating over 2,000 other children across the country.

The team of six year 11 students from Westborough High School in Dewsbury, were crowned during a
ceremony held at Buckingham Palace, hosted by HRH The Duke of York.

Lease 2 Learn is a “competitive and affordable” way for students, teachers and the wider community to lease
and hire IT equipment such as laptops.

Responding to research that over a third of students at their school did not have access to a computer or
laptop at home, the team aimed to give every student access to the technology they need to succeed.
They were given £1000 of venture capital from Peter Jones to launch in October and after trading through
November and December achieved a net profit margin of 1,839%.

Source: adapted from http://startups.co.uk/lease-2-learn-win-tycoon-in-schools-2016

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Extract B
The Collapse of Comet
Like many other retailers, electrical chain Comet was hit hard by the uncertain economic environment,
slow consumer spending and lack of consumer confidence. The electrical retail sector has been particularly
challenging, with fewer people buying big ticket items such as TV’s, fridges and dishwashers, and fewer first
time property buyers who have historically been an important market for Comet and other electrical retailers.

Despite the efforts of the experienced management team, Comet struggled to compete with online retailers
which have far lower overhead costs and can offer cheaper products. Not only that, the products that Comet
sold were all particularly suited to internet retail with products such as washing machines needing to be
delivered even if you buy them in store.

Against a backdrop of continuing weak sales, and speculation that Comet was being approached by
prospective buyers, suppliers were reluctant to provide credit, which had a negative effect on cash flow. The
inability to obtain supplier credit for the peak Christmas trading period also meant that the company had no
realistic prospect of raising further capital to build up sufficient stock to allow it to continue trading.

Neville Kahn, joint administrator and restructuring services partner at Deloitte, commented: “Comet had been
battling the changing landscape of the electrical retail sector for many years. It had become increasingly
difficult for it to compete with online retailers which don’t face the same overheads such as store rents and
business rates.”

Source: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9652085/Comet-collapse-Deloitte-blames-
internet-and-lack-of-first-time-home-buyers.htm)

Extract C
Selected financial data for a computer tablet
manufacturer, 2016
Fixed costs £12m
Price per unit £400
Units sold 50,000
Variable costs = 25% of the price per unit

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Extract D
Kalma Baby looks for additional funding
A mum who launched yoga classes especially for babies after finding the exercise helped her son is now
looking to roll out the business.

Rebecca Riley, the sole shareholder of the business, launched Kalma Baby Ltd just over a year ago, teaching
baby and parent yoga classes.

Kalma Baby has expanded rapidly, running classes in 9 various locations across the North East and Rebecca
is now looking to grow the business further with a focus on Carlisle, Scotland and the Scottish Borders.

Following the success of the business, Rebecca no longer teaches classes herself, preferring to focus on
growing the business.

To help grow the business, Rebecca has received advice from Natwest who have worked with her to help
improve her business model. Kalma baby is now working on attracting additional funding to facilitate her
ambitious expansion plans.

“It is no longer viable for me to keep going to all those classes so the funding will help to bring further people
into the business. I have also ploughed a lot of money into marketing”.

Source: adapted from http://www.chroniclelive.co.uk/business/business-news/baby-yoga-business-kalma-baby-13124216

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1 a) What is meant by variable costs.

(2 marks)

b) What is meant by margin of safety.

(2 marks)

c) Using the data in Extract C, calculate how much profit the computer tablet
manufacturer made in 2016.
(4 marks)

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d) Explain how using venture capital might benefit Lease 2 Learn.

(4 marks)

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e) Assess two benefits of budgeting to a business such as Lease 2 Learn.

(8 marks)

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f) Assess whether the failure of Comet was due to online competition.

(10 marks)

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g) Kalma Baby is looking for additional funding to help grow the business. The owner, Rebecca Riley, could
invite people to purchase shares in Kalma Baby, or, she could obtain a bank loan.

Evaluate these two options and recommend which one Kalma Baby should use to grow the business.
(20 marks)

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