2015 Jupeb Business Studies

Business Studies

Question 1

(a) Personality Traits Associated with Entrepreneurs (5 Marks)

Entrepreneurs possess certain characteristics that enable them to identify opportunities and successfully manage businesses. These traits include:

1. Risk-Taking Ability — Entrepreneurs are willing to take calculated risks in pursuit of business opportunities.
2. Innovation and Creativity — They develop new ideas, products, and methods of doing business.
3. Self-Confidence — They believe in their abilities and decisions even in uncertain situations.
4. Initiative and Proactiveness — Entrepreneurs actively seek opportunities rather than waiting for them to arise.
5. Leadership Ability — They can motivate, coordinate, and direct people towards achieving business goals.

(b) Five Roles of Entrepreneurship in the Nigerian Economy (10 Marks)

1. Employment Generation — Entrepreneurs create jobs through the establishment and expansion of businesses, thereby reducing unemployment.
2. Contribution to National Income — Entrepreneurial activities increase the production of goods and services, contributing significantly to Gross Domestic Product (GDP).
3. Promotion of Innovation — Entrepreneurs introduce new products, technologies, and production methods that improve efficiency and competitiveness.
4. Capital Formation — Entrepreneurship encourages investment and the mobilization of financial resources for productive activities.
5. Industrial and Economic Development — Entrepreneurs promote local industries, reduce dependence on imports, and support economic diversification.

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Question 2

(a) Net Profit Margin (5 Marks)

Net Profit Margin is a profitability ratio that measures the percentage of sales revenue remaining after all expenses have been deducted.

Formula

$$\text{Net Profit Margin} = \frac{\text{Net Profit After Tax}}{\text{Sales Revenue}} \times 100$$

Importance

• Measures overall profitability.
• Indicates efficiency in cost management.
• Helps investors assess business performance.

(b) Break-Even Analysis (5 Marks)

Break-even analysis determines the level of sales at which total revenue equals total cost, resulting in neither profit nor loss.

Formula

$$\text{Break-Even Point (Units)} = \frac{\text{Fixed Costs}}{\text{Selling Price per Unit} - \text{Variable Cost per Unit}}$$

Importance

• Assists in pricing decisions.
• Helps determine minimum sales required.
• Useful for planning and budgeting.

© Private Limited Company (5 Marks)

A Private Limited Company is a business organization incorporated under the law with ownership divided into shares held by private individuals.

Features

• Separate legal entity.
• Limited liability of shareholders.
• Perpetual succession.
• Restriction on transfer of shares.
• Uses the suffix “Ltd” after its name.

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Question 3 — Ratio Analysis for Determination Ltd. (Year Ended 31st December, 2012)

Relevant Data

Item	₦’000
Sales Revenue	99,500
Gross Profit	33,500
Profit After Tax	11,100
Profit Before Tax	17,600
Finance Cost	3,500
Current Assets	37,500
Inventory	15,500
Current Liabilities	36,500
Trade Receivables	17,000
Shareholders’ Equity	55,500
Non-Current Loan	22,000
Total Assets	114,000
Cost of Sales	66,000
Opening Inventory	15,000
Closing Inventory	15,500

Average Inventory

$$\frac{15,000 + 15,500}{2} = 15,250$$

Capital Employed

$$55,500 + 22,000 = 77,500$$

i. Gross Profit Percentage

$$\frac{33,500}{99,500} \times 100 = 33.67\%$$

ii. Net Profit as a Percentage of Sales

$$\frac{11,100}{99,500} \times 100 = 11.16\%$$

iii. Current Ratio

$$\frac{37,500}{36,500} = 1.03 : 1$$

iv. Acid Test (Quick Asset) Ratio

$$\frac{37,500 - 15,500}{36,500} = \frac{22,000}{36,500} = 0.60 : 1$$

v. Trade Receivables Collection Period (Weeks)

$$\frac{17,000}{99,500} \times 52 = 8.9 \text{ weeks}$$

vi. Inventory Turnover

$$\frac{66,000}{15,250} = 4.33 \text{ times}$$

vii. Shareholders’ Equity Ratio

$$\frac{55,500}{114,000} \times 100 = 48.68\%$$

viii. Return on Equity (ROE)

$$\frac{11,100}{55,500} \times 100 = 20.00\%$$

ix. Return on Capital Employed (ROCE)

Profit Before Interest and Tax (PBIT):

$$17,600 + 3,500 = 21,100$$

ROCE:

$$\frac{21,100}{77,500} \times 100 = 27.23\%$$

x. Gearing Ratio

$$\frac{22,000}{77,500} \times 100 = 28.39\%$$

Summary Table

Ratio	Answer
Gross Profit Percentage	33.67%
Net Profit Margin	11.16%
Current Ratio	1.03 : 1
Acid Test Ratio	0.60 : 1
Trade Receivables Collection Period	8.9 weeks
Inventory Turnover	4.33 times
Shareholders’ Equity Ratio	48.68%
Return on Equity (ROE)	20.00%
Return on Capital Employed (ROCE)	27.23%
Gearing Ratio	28.39%

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Question 4

(a) Five Advantages of a Partnership over a Sole Proprietorship (7½ Marks)

1. Larger Capital Base — Partners contribute funds, enabling the business to raise more capital.
2. Shared Responsibilities — Management duties are divided among partners, reducing workload.
3. Wider Range of Skills — Partners contribute different skills, knowledge, and expertise.
4. Business Continuity — The business can continue operating even when one partner is unavailable.
5. Shared Risk — Losses and risks are shared among partners.

(b) Five Reasons for Dissolution of a Partnership (7½ Marks)

1. Expiry of Agreed Duration — The partnership ends when the agreed period expires.
2. Death of a Partner — The death of a partner may automatically dissolve the partnership.
3. Bankruptcy of a Partner — A bankrupt partner may no longer legally participate in the business.
4. Mutual Agreement — Partners may unanimously agree to dissolve the business.
5. Court Order — A court may order dissolution due to misconduct or persistent disputes.

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Question 5

(a) Five Components of Emotional Intelligence (5 Marks)

1. Self-Awareness
2. Self-Regulation
3. Motivation
4. Empathy
5. Social Skills

(b) Difference Between Transactional and Transformational Leadership (10 Marks)

Transactional Leadership	Transformational Leadership
Based on rewards and punishments.	Based on inspiration and vision.
Focuses on routine operations.	Focuses on innovation and change.
Encourages compliance.	Encourages commitment and creativity.
Uses external motivation.	Uses internal motivation.
Maintains the status quo.	Drives organizational transformation.

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Question 6

(a) Distinction Between Supply Curve and Supply Schedule (6 Marks)

Supply Schedule	Supply Curve
Presented in tabular form.	Presented graphically.
Shows numerical values.	Shows visual relationship between price and quantity supplied.
Easier for exact figures.	Easier for trend analysis.

(b) Explanatory Notes on Supply Concepts (9 Marks)

i. Joint Supply

Joint supply occurs when the production of one commodity automatically results in the production of another commodity.

Examples: beef and leather; petrol and kerosene.

ii. Competitive Supply

Competitive supply occurs when the same resources can be used to produce different products.

Examples: maize and rice production; tables and chairs manufacturing.

iii. Composite Supply

Composite supply occurs when different products satisfy the same need.

Examples: petrol, diesel, and electricity as energy sources; tiles, wood, and carpets for flooring.

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Question 7

(a) What is SWOT Analysis? (5 Marks)

SWOT Analysis is a strategic planning tool used to evaluate an organization’s:

• Strengths
• Weaknesses
• Opportunities
• Threats

It helps organizations understand their internal capabilities and external business environment for better decision-making.

(b) Components of Internal and External Environments in SWOT Analysis (10 Marks)

Internal Environment (Strengths and Weaknesses)

Component	Explanation
Financial Resources	Availability of funds and profitability.
Human Resources	Skills and quality of employees.
Technology	Equipment and production processes.
Brand Reputation	Public image and customer loyalty.
Management	Leadership and organizational structure.

External Environment (Opportunities and Threats)

Component	Explanation
Market Trends	Changes in consumer demand.
Economic Factors	Inflation, interest rates, exchange rates.
Technological Changes	Emerging innovations.
Government Policies	Laws and regulations.
Competition	Activities of rival firms.

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Question 8 — YAROS TOY LTD: Income Statement for the Year Ended 31st January, 2009

Preliminary Calculations

Item	Calculation	Amount (₦)
Sales Revenue	3,000,000 × 2.00	6,000,000
Material Cost	3,000,000 × 0.35	1,050,000
Labour Cost	3,000,000 × 0.50	1,500,000
Overheads	Given	750,000
Total Cost of Sales	1,050,000 + 1,500,000 + 750,000	3,300,000

Income Statement

Particulars	₦	₦
Sales Revenue		6,000,000
Less: Cost of Sales
Materials	1,050,000
Labour	1,500,000
Overheads	750,000
Total Cost of Sales		(3,300,000)
Gross Profit		2,700,000
Corporation Tax (20%)		(540,000)
Profit After Tax		2,160,000
Dividends Paid		(500,000)
Retained Profit		1,660,000

Summary

Item	Amount (₦)
Sales Revenue	6,000,000
Gross Profit	2,700,000
Taxation	540,000
Profit After Tax	2,160,000
Dividends	500,000
Retained Profit	1,660,000