senior - western cape · - 5 - article: 2 opec announces oil output cut the cartel that controls...
TRANSCRIPT
Seni
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Grade
9Economic and Management
Sciences
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ECONOMIC & MANAGEMENT SCIENCES GRADE 9
TEACHER’S GUIDE
TERM 1 WEEK 1 and 2 AS 9.1.1 and 9.1.2: THE CIRCULAR FLOW (THE ECONOMIC CYCLE) NOTE: The content below should be spread over 2 weeks. Methodology:
1. Revise these concepts: Needs, Wants, Scarcity, The Circular Flow (Economic cycle) and the role players within the South African context
2. Explain the following concepts:
a. Factors of production: – items needed for production to take place – also referred to as resources/ means of production – Capital, Entrepreneur, Labour and Land (or natural resources) – Hint: - for learners to remember this, CELL!
b. Remuneration for the factors of production: - payments/ rewards to factors of production e.g. Capital = Interest, Entrepreneur = Profit (income less expenses), Labour = Wages and Salaries (inform learners about the difference between wages and salaries)
c. Goods: - tangible items which have gone through the production process – sometimes called commodities/ merchandise/ products (different words, same thing!)
d. Services: – rendered by people such as professionals (e.g. medical doctors/ educators/ legal practitioners/ cosmetologists, etc)
e. The foreign sector: - the economic sector which allows for international trade to take place – refer to sanctions prior to 1994 in our country (the RSA) – make reference to the concept of global economy
3. Explain the role of the foreign sector within the South African Circular Flow (economic cycle) - the positive and negative influences
4. Explain the following flows in the South African Circular Flow (economic cycle):
a. Refer to the circular flow (economic cycle) diagram below b. Start with a two sector economy i.e. Households and Businesses (firms) c. Add a third sector (government) and a fourth sector (foreign) d. The emphasis: goods flow (real flows) and money flow e. Learners should be able to construct this diagram and explain the reasoning behind it
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Assessment: Informal - Baseline activity: Revise concepts with learners as outlined above. (see case study for a class discussion below) Formal - Activity 1: Presentation: Learners must draw up a fully labeled diagram indicating flows and relationships with a brief discussion below the diagram. A marking memorandum must be compiled with this activity. Questions for Debate and Discussion: 1. What is the importance of ostrich farming to South Africa? 2. What percentage of the world’s ostrich meat did South Africa supply in 1995 and what
percentage did it supply in 2000? What contributed to this change? 3. Which countries compete with South Africa in this market? 4. Do you think that South Africa has an absolute or comparative advantage in the ostrich market
since 2000? Substantiate. 5. Ostriches thrive in hot and dry climates. Why would you think that South Africa has a
comparative advantage over Europe? Integration: Languages, Social sciences Resources: Textbooks, Handouts from the educator, Internet websites Vocabulary: Economic cycle Role players Money flows Real flows Goods market Factor market
WEEK 3 and 4 AS 9.1.3: DEMAND AND SUPPLY Methodology: 1. Revise these concepts: Demand and Supply 2. Explain the following concepts:
a. The market: - a situation (or place) where sales transaction takes place – implies two role players i.e. the seller(supply) and the buyer (demand) – Inform the learners that anything to do with selling (the producer/ entrepreneur) forms part of the supply side of the market
b. Law of demand: - when prices increase, quantity demanded decreases, ceteris paribus (a Latin phrase which is loosely defined as ‘other things being constant’ – give learners an example)
c. Law of supply: - when prices increase, quantity supplied increases, ceteris paribus (explain to learners that the reason for this is profit maximization)
Ostrich farming in South Africa South Africa has around 600 export – registered ostrich farms, with roughly 300 000 ostriches slaughtered in the country every year. The investment in production and processing is around R2.1 million per year, including wages of 20 000 workers. The EU is the largest consumer of ostrich meat from South Africa. Asia is also a major export destination. Other countries that have recently started farming ostriches are Namibia, Zambia, China, Japan and the USA. In 1995, South Africa was responsible for 82% of production. Since 2000, this figure dropped to 65%. China, with government backing, is particularly growing in strength. South Africa seems to have comparative advantage over Europe. In South Africa, the value of slaughtered bird is broken down into 45% skin, 45% meat, and 10% feather, while in Europe the breakdown is 75% meat and 25% skin. South Africa’s competitors must still explore how to generate income from feathers. Source: www.SouthAfrica.info, 2 August 2007
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d. Demand curve: - a curve constructed due to the relationship between the price and quantity demanded – has a negative gradient (slope) due to the law of demand
e. Supply curve: - a curve constructed due to the relationship between the price and quantity supplied – has a positive gradient (slope) due to the law of supply
f. Market in equilibrium: - the point where both the sellers and buyers are happy to trade at a certain price (the market ‘clearing’ price) – a utopian (ideal) situation hence the market has ‘cleared’
3. Construct line graphs and show how the factors would influence market prices and changes in market equilibrium points.
• Refer to the following examples: BACKGROUND TO THE LAWS OF AGGREGATION Shifts / Changes in aggregate demand and aggregate supply: Thus far we have considered a movement along the demand and supply curves caused solely by a change in price. The focus now changes to the shift in the demand and the supply curves. A movement along the demand and supply curves is always seen as a short term movement whereas shifts in the demand and supply curves indicate a long term change in both these curves. Let us now consider an increase in both these curves: An increase in these curves is represented by an upward shift of both the demand and supply curves (perforated / broken line). As a result of this change, equilibria change from E to E1, representing a price and quantity change from Pe to P1 and Qe to Q1 respectively.
Shift in demand:
D D1 D1 D S S P1 E1 Pe E Pe E P1 E1 D1 D S D S D1 Qe Q1 Q1 Qe
Increase in total demand Decrease in total demand Shift in supply:
S S1 D D S1 S Pe E P1 E1 P1 E1 Pe E S S1 D S1 S D Qe Q1 Q1 Qe Increase in total supply Decrease in total supply
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4. Explain how demand and supply could influence prices: • Use the table below to explain how aggregate (total) demand and aggregate (total)
supply would be influenced (shift to the left OR to the right) by the following factors:
Factors that will cause the demand curve to shift:
Factor Example Change in the number of buyers / consumers
An increase in the population in Khayelitsha may shift the demand curve for houses in Khayelitsha to the right
Change in income An increase in (real) income may shifts the demand for motor cars to the right
Change in preference Judgment that cigarettes are harmful to health could shifts the demand curve for cigarettes to the ….
Change in the price of complements
An increase in the price of paint may shift the demand curve for paint–brushes to the …
Change in the price of substitutes An increase in the price of butter may shift the demand curve for margarine to the …
Change in expectations Expectancy of a sugar shortage in the near future could shift the demand curve for sugar to the …
Factors that will cause the supply curve to shift:
Factor Example
Change in the number of sellers New sellers entering a field where high profits are generated shifts the supply curve to the right
Change in technology Higher output in grapes due to generic engineering shifts the supply curve to the right
Change in the price of resources An increase in the wage rate for textile workers without an accompanying increase in productivity shifts the supply curve of clothing to the …
Change in the price of another (related) product
An increase in the price of corn shifts the supply curve of wheat to the …
Change in expectations Expectations that a much higher gold price next year will shift the supply curve of gold today to the ….
Notes to the teacher: 1. It is imperative that the individual demand curve is addressed first and then the individual supply curve before getting into the laws of aggregation. 2. Learners must construct the graphs with the educator and avoid memorising them. Assessment: Informal: Learners may do a case study and a class tutorial exercise (See the examples below!)
Article: 1
THE HOTTER IT GETS THE MORE YOUR COCA – COLA MAY COST
Coca Cola is testing a vending machine that automatically raises the price of the world’s favourite soft drink when the temperature increases.
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Article: 2
OPEC ANNOUNCES OIL OUTPUT CUT
The Cartel that controls just under half of the world’s oil production, OPEC, agreed today to cut output by 1.5m barrels a day, news that has pushed the price of a barrel of crude oil above $20. Oil has tumbled on commodity markets due to lower demand after the September 11 attacks and a build–up of capacity among the world’s major suppliers, Oil prices have fallen to as low as $16 a barrel from their peak of $35 per barrel in November last year.
Read the articles above and using your knowledge of price theory / demand and supply analysis, answer the following questions:
1. What is likely to happen to the demand for Coca–Cola soft drinks during the summer months?
2. Explain why the change in demand for Coca–Cola will increase the price of the other soft drinks.
3. Illustrate the likely changes in demand for Coca–Cola drinks during the summer months on a suitable diagram.
4. What is a cartel? 5. Explain why the OPEC decision to cut oil production is likely to increase the price at which
crude oil is traded on the world market.
SUGGESTED CLASS TUTORIAL: Various possibilities are suggested as answers to the following questions or statements. Indicate the best alternative.
A.1 Which one of the following factors will not shift the demand curve? 1. A change in the size of the population. 2. Income increases. 3. Changes in the tastes of the consumers. 4. An increase in the price of the specific product.
Questions A.2 and A.3 are based on Figure 1. D1 P D R I C E B C D1 D QUANTITY
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A.2 Which one of the following statements is correct? a. A movement from point B to point C indicates a change in demand. b. A shift from curve DD to curve D1D1 indicates an increase in demand. c. The point of equilibrium is indicated by the distance between point B and point C
(1) Only a (2) Only b (3) Only c (4) Only a and c (5) All the statements are correct
A.3 Which one of the following statements is correct?
1. A shift of the curve from D1D1 to DD indicates an increase in the population. 2. A change in technology will cause the curve to shift. 3. A decrease in population will force the curve upwards. 4. An increase in the quantity demanded is indicated by a movement from point B to point
C. 5. A change in supply will also change the DD curve.
A.4 Which one of the following statements will cause the supply curve to shift to the right?
(1) An increase in quantity supplied. (2) A change in demand. (3) A decrease in the number of firms. (4) An increase in the price of inputs, like labour costs. (5) An improvement in technology.
A.5 This question deals with complements in production. Assuming that wheat and bran are
complements in production. What is going to happen to the supply of bran if the price of wheat increases?
(1) It will decrease (2) It will not change (3) It will increase (4) It is unpredictable
Integration: Languages, Social Science Resources: Textbooks, Internet: websites, etc. Vocabulary: Demand Supply Ceteris Paribus Market equilibrium Changes in total supply and total
demand WEEK 5 and 6 THE NATIONAL BUDGET AND SUSTAINABLE GROWTH AND DEVELOPMENT Methodology: 1. Revise the concept, RDP (Reconstruction and Development Programme) 2. Investigate and debate the successes and shortcomings of the RDP:
• Learners are to investigate the above from the internet and/or resources provided by the educator, e.g. newspapers, magazines relevant to the RDP, etc.
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3. Explain the following: • The national budget: a financial plan of expected revenue (income) and expected
expenditure of the government • Income items of the government: - taxation (mainly), administration, etc. • Expenditure items of the government: - education, social welfare, etc. • Economic growth: - an increase in the gross domestic product of the country • Sustainable growth: - economic growth over a long period of time • Trade Agreements: - agreements (or deals) between countries (internationally) and regions
4. Discuss the effect of the national budget on the economy:
• Example: an increase in taxation can act as an injection (more money into the economy) towards such items as the national education, health, social welfare, etc.
Assessment Informal: Revision – Question and Answer technique Formal: Task 1, Activity 2 Form of assessment: Research project Gather articles on the recent National Budget. Highlight the effects of this budget on the South African economy with particular reference to taxation, expenditure on education, social welfare, health and security. Use a rubric as an assessment tool. Integration: Languages, Life Orientation Resources: Newspaper articles, Textbooks, Internet websites, Members of the community Vocabulary:
National Budget Fiscus Fiscal year Taxation Trade Agreements WEEK 7 LO 4 Entrepreneurial knowledge and skills
• Small , medium and micro enterprises (SMMEs) Methodology: 1. Educator asks leading questions to determine learners’ understanding about:
o Unemployment in SA o Entrepreneurship o The role small, medium and micro enterprises can play in job creation
2. Educator explains SMMEs :
o Small enterprise – normally employs between five to fifty persons. o Medium enterprise – can employs up to two hundred people. o Micro enterprise – normally involves only the owner.
3. Educator discusses the role SMMEs can play in wealth and job creation:
o It allows people to earn their own income o It provides employment opportunities o It stimulates/triggers the demand for new products o It promotes competition o Little start-up capital needed o Adapts easily to change o People with basic skills can start these businesses o These enterprises come up with new, innovative and creative goods and services.
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4. Learners complete notes in their work books. 5. Educator explains how to go about writing a newspaper article:
o Suitable headings o Paragraphing o Adherence to topic o Style - formal writing, check spelling e.a. o Focus writing on answering the “three W’s”:
• What? • Who? • Why?
6. Learners do research activity on “Why the government is supporting SMMEs”: o The government is interested in economic growth and development and to achieve this, it
has to stimulate/encourage participation by SMMEs/entrepreneurship i.e. encourage more people to be in business by providing an enabling environment for them to operate in (make it easy for people to be attracted to be in business)
o Lowering the costs of operating a business for SMMEs
o Exempting these businesses (SMMEs) from taxes, etc.
o Support SMMEs by providing advisory services
o Provide loans to small and micro businesses.
Consolidation of topic: The learners write an article for the local school newspaper/magazine focusing on:
• The role SMMEs play in wealth and job creation. • Why government supports SMMEs
Assessment: Informal: Newspaper article –– Educator assessment: rubric.
Instructions: You are a journalist for your local school magazine:
o Write an article for the magazine in which you explain the following: • the role SMMEs play in wealth and job creation • why government supports SMMEs
Example of Rubric: CRITERIA MARKS: 0-2 3-5 6-8 9-10
Structure, style and tone
Poor layout, no or inappropriate heading, no
paragraphing, lacks formal learning area
specific language
Average layout, including heading,
paragraphing, formal learning area
specific language
Good layout, including heading,
paragraphing, formal learning area
specific language
Excellent layout, including
appropriate heading,
paragraphing, formal learning area
specific language 0-2 3-5 6-8 9-10
Adherence to topic: Paragraph on role of SMMEs in wealth and job creation
Demonstrate little or no
understanding of the role of SMMEs
Demonstrate average
understanding of the role of SMMEs
Demonstrate good understanding of the role of SMMEs
Demonstrate excellent
understanding of the role of SMMEs
0-2 3-5 6-8 9-10
Adherence to topic: Paragraph on why government support SMMEs
Demonstrate little or no
understanding of why government support SMMEs
Demonstrate average
understanding of why government support SMMEs
Demonstrate good understanding of why government support SMMEs
Demonstrate excellent
understanding of why government support SMMEs
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Integration: Languages Resources: Textbooks, Newspaper articles, Magazines, Websites. Vocabulary
Small enterprise
Medium enterprise
Micro enterprise
Unemployment
Innovative
Creative
WEEK 8 AS 9.3.3: Cash transactions of a service business and retail business Methodology: 1. Revise cash transactions, CRJ and CPJ of a service business. 2. Revise posting to the general ledger accounts and balancing of the Bank account. 3. Explain and draw up a Trial Balance. Use an exercise as an example. Assessment: Informal Assessment: 1. Baseline activity: Learners do an exercise that covers journals and posting to the general
ledger. 2. Learners do an exercise to consolidate the above information. Integration Languages, Mathematics Resources: Text book, work books Vocabulary:
Trial balance Service business WEEK 9 AS 9.3.1: Basic financial statements of a service business Methodology: 1. Explain the concept of a financial period. 2. Explain and prepare the Income Statement of a service business, introducing the concept of net
profit (or net income). See format below. 3. Explain and prepare the Balance sheet of a service business. (See format below). 4. Learners do exercises to consolidate their knowledge of financial statements. Assessment: Informal assessment: Class test for consolidating the formats of The Income Statement and Balance Sheet. Integration: Languages, Mathematics Resources: Text book, work books
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Vocabulary: Financial period Income
Statement Net profit Balance Sheet Fixed assets
Current assets Equity Drawings Liabilities FORMATS FOR FINANCIAL STATEMENTS OF A SERVICE BUSINESS
Name of Business Income Statement for the year ended ‘31 December 20..’
Name of Business Balance Sheet at ‘31 December 20..’
Current Income xxx Assets Other Income*: xx Assets xxx Commission Income xx Land and Buildings xx Rent Income xx Vehicles xx Gross Income xxx Equipment xx Expenses*: (xxx) Fixed Deposit** xx Salaries & Wages xx Stationery xx Current Assets xx Trading Licence xx Bank xx Bank Charges xx Net Profit for the year xx Total Assets xxx
Equity and Liabilities Owner’s Equity xxx Capital at beginning of the year xxx Add Net Profit xx less Drawings (xx) Liabilities xx Loan** xx Total Equity and Liabilities xxx ** for enrichment
* adapt the items to those given in a particular exercise
WEEK 10 Revision and consolidation of work completed during term 1.
Assessment: Formal Task 1 – Activity 3: Control Test The control test should cover the content addressed in term 1. (Total: 75 – 100 Marks)
Summary of assessment: 1. Educator records all assessment tasks done during term 1:
Assessment Task 1 Activity 1 - Presentation on the economic cycle
Assessment Task 1 Activity 2 - Research project on the National budget
Assessment Task 1 Activity 3 - Control Test
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TERM 2 WEEK 11 SAVINGS AND INVESTMENTS Methodology: 1. Revise the following concepts:
• Savings: - putting surplus money into a savings account at the bank for shorter periods so that it will be available when needed and earn interest in the meantime
• Investments:- total amount of money used in a business with an aim of either profit maximization or economic prosperity
• Economic growth:- an increase in the economic activities of a country; it should lead to a general improvement in people’s standard of living
• Economic prosperity:- similar to economic development – an improvement in the standard of living/ welfare levels/ prosperity levels of the citizens of the country Notes to the educator:
• The economic goal of any country is to increase both savings and investment. • Refer to the investment multiplier on a very elementary level. • The multiplier effect can be explained by using the example of the “ripple effect”
If Kosie van der Merwe starts a brick producing firm, he create jobs, more money is earn in the form of wages and salaries, more money gets spent on goods and services, an increase in total demand leads to an increase in total supply etc. ultimately leading to an increase in the general standard of living.
Consolidate the following core concepts: • Gross Domestic Product (GDP) = total number of products produced by the
country/role players in the economy within a certain period of time. • Gross Domestic Income (GDI) = total income earned by all the citizens/role players
in the economy • Gross Domestic Expenditure (GDE) = total expenditure by the citizens of the
country or the role players within the borders of the country
Assessment Formal: Task 2 Activity 1 Form of Assessment: Case Study (An example and a possible memorandum is shown below)
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AVOIDING THE MONEY TRAP
Budgeting is a way to keep debt to a minimum
CREDIT cards, student loans, bank overdrafts – students often feel they are being bombarded with temptations to slip into debt. And many of them do.
A report by market research company, Mintel, says that nearly two–thirds of 16 – 25 year olds are in debt, with nearly one in four aged between 20 and 24 owing at least R3,000.
But, it is difficult for students to live beyond their incomes. The National Student Survey in 2001, conducted by ICM on behalf of Hobsons, found that 28% had to struggle while 49% lived on between R201 and R500.
For most students, learning how to budget is the key to keeping debt to a minimum. Ensuring that your income exceeds your expenses is an excellent theory, but it does not allow for the unforeseen expenses that crop up from time to time and send the most careful financial planning straight out of the window.
Students must learn basic budgeting skills as early as possible. They have to calculate their monthly income (student loans, parental contributions, part time and holiday earnings, etc) and their monthly expenses (tuition fees, rent, food, utility bills, etc).
This way it is possible to see where the cash is going and make adjustments before it all disappears. One way to save is to make maximum use of the many student savings available. These include:
- Buying books and stationery at the union shops. - Using student discount cards such as the NUS card, the Young Person’s railcard and the
Hobsons student value card. - Downloading the many student discount vouchers that are available online such as those at
www.studentpages.com
Other basic strategies will also help students to stay within their budgets, among them:
- At the bank, limit cash withdrawals to one a week and use only prearranged interest – free student overdraft facilities.
- Never to go food shopping on an empty stomach, and when you do go make sure it is at the end of the day when lots of fresh produce is marked down
- Pay off credit card balances in full at the end of each month – don’t let interest mount up
- Ration your money for entertainment – and stick to it
If you’re still run into financial difficulties after taking all these precautions, don’t ignore the problem, it won’t go away. Talk to the bank advisor or arrange a meeting with your university welfare office.
With the abolition of grants, debt has become an inevitable part of life for most students. It is vital to stay positive and to take comfort in the knowledge that you are not alone. Careful budgeting will help keep down student debt.
Information @your fingertips: Hobsons Student Service www.hobsons.com; the student loan company www.slc.co.uk; the National Union of Students: www.nusonline.co.uk; Consumer Credit Counselling Services
08001381111; the money Advice Association 0476 594970; the National Debt line 08078084000
Adapted from SOURCE: Financial Mail
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Questions: Read the article ‘’Avoiding the Money Trap’ and answer the questions below on A4 paper during one lesson. It may be completed for homework. Hand it in at the next lesson.: Imagine you have successfully completed your career at (your school) and are about to further your studies with a degree at university.
1. Suggest two Internet sites from the article, which might help you with budgeting. (4) 2. What do the following terms mean?
i. Debt ii. Ration iii. Overdraft iv. Credit card v. NUS (10)
3. Identify the mistake in the third paragraph of the Financial Mail article and write the
correct sentence. (2) 4. The article talks about ‘basic budgeting skills’. Suggest four of these. (8) 5. Identify five areas in which you as a student could make ‘savings’ in your monthly
expenditure. (10) 6. What, according to the article is the most important thing to do whilst you are studying? (2) 7. Draw up an imaginary budget for a month using the following figures:-
Tuition fees – R1000, Rent – R750, Waitroning – R3000, Motor Expenses – R400, Recreation – R250, savings – R200, Parental / guardian contributions – R18000
per annum, other costs – R300 (12) 8. Suggest an ‘unforeseen expense’ which might crop up whilst you are at varsity. (2)
[50 ]
SUGGESTED MEMORANDUM
1. www.hobson.com; www.slc.co.uk; www.nusonline.co.uk (4) 2. Debt – amount owed, Ration – restricting one to a certain amount a time, Overdraft –
form of loan, being allowed to use over and above what one has available, Credit card – quasi money allowing one to buy now and pay for the item later, NUS – Student discount cards (10)
3. “It is hard for students to live within their incomes” (2) 4. Basic budgeting skills:
o Limit cash withdrawals to once a week and use only pre-arranged interest – free student overdraft facilities
o Never go food shopping with an empty stomach and when you do go make sure it is at the end of the day when lots of produce is marked down
o Pay off credit card balances in full at the end of each month and do not let interest mount up
o Ration your money for entertainment and stick to it (8) 5. Any 5 of the following:
- Buying books and stationery at the union shops. - Using student discount cards such as the NUS card, the Young Person’s railcard and
the Hobsons student value card. - Downloading the many student discount vouchers that are available online such as
those at www.studentpages.com - At the bank, limit cash withdrawals to one a week and use only prearranged interest –
free student overdraft facilities.
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- Never to go food shopping on an empty stomach, and when you do go make sure it is at the end of the day when lots of fresh produce is marked down
- Pay off credit card balances in full at the end of each month – don’t let interest mount up - Ration your money for entertainment – and stick to it (10)
6. Having fun. (2) 7. Imaginery Budget:
Income R C Expenses R C Waitroning √ 3000 00 Tuition fees √ 1000 00 Parental / guardian contributions √√ 1500 00 Rent √ 750 00 Motor Expenses √ 400 00 Recreation √ 250 00 Savings √ 200 00 other costs √ 300 00 TOTAL INCOME √ 4500 00 TOTAL EXPENSES √ √ 2900 00
(12) 8. Medical reason etc. (2) [50] Integration: Languages, Social sciences
Resources: Newspaper, Textbooks, Internet websites Vocabulary:
GDP GDE GDI Investment multiplier
WEEK 12 - 13 PRODUCTIVITY Methodology: 1. Revise the following concepts:
• Productivity: - putting surplus money into a savings account at the bank for shorter periods so that it will be available when needed and earn interest in the meantime
• Economic growth:- an increase in the economic activities of a country; it should lead to a general improvement in people’s standard of living
• Economic prosperity:- similar to economic development – an improvement in the standard of living/ welfare levels/ prosperity levels of the citizens of the country
2. Explain the following concepts:
• Global competition: - competition which takes place internationally / sharing the global market
• Globalisation: - the process which encourages the above phenomenon 3. Discuss the effect of productivity on:
• Economic growth - GDP would increase and as a result, the investment multiplier / ripple effect would take its course
• Economic prosperity – as a result of the above, the standard of living or general welfare levels would also improve
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• Global competition – due to the above–mentioned factors or aspects; the country is able to produce enough for both the local and the international markets which would ultimately improve our competitiveness globally. Notes to the educator: • Before there is economic prosperity/ development, there would be economic growth • It is therefore, important that economic growth is dealt with before economic prosperity • Global competition has both positive and negative implications and learners should be
exposed to this phenomenon • This assessment standard can be linked to / integrated with AS 9.1.2
Assessment: Informal Assessment: Conduct a class discussion on economic growth and prosperity. Highlight the influence of global competition on South Africa’s economic growth and prosperity. Integration: Languages, Social sciences Resources: Newspaper, Textbooks, Internet websites Vocabulary:
Global competition Globalisation
WEEK 14 AS 9.3.2 Public relations strategies and actions to address social and environmental responsibility
Methodology: 1. Educator introduces the topic by showing learners a collage depicting different actions business undertake in support of the community, schools, old age homes, etc. 2. Educator explains the following concepts:
o Business strategies – action plans business undertake to achieve goals. o Public relations – the relationship business have with its employees and outsiders in order
to promote a positive image. o Social responsibility – things business do in support of the upliftment of the
community/society they do business in. o Environmental responsibility – business demonstrates responsibility towards the
environment: • by using resources sparingly • use inputs that is (eco-friendly) - not harmful to the environment • does not add to environmental pollution • Re-use – re-use as much material as possible. • Recycle – recycle material • Reduce – reduction of waste material
o Disadvantaged communities – groups of people living together who are less fortunate, i.e. unemployed, low education levels, etc.
3. Educator explains public relation strategies/actions businesses and organisations undertake to address social and environmental responsibility by drawing on real life examples from newspapers, etc.
• E.g. Business sponsoring the schools’ rugby team • Youth development programmes • Nature conservation awareness programmes • Using eco-friendly technology • HIV/AIDS-awareness programmes
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Assessment Formal Assessment: Written Report Learners must conduct an investigation into the actions and strategies of the public relations section of a particular business or organisation that address social and environmental responsibility. They must write a report on their findings. Note: At least 5 articles on social responsibility and 5 articles on environmental responsibility may be included.
Integration: Languages, Social Sciences Resources: Textbooks, Magazines, Websites, Newspaper articles Vocabulary
Business strategies
Public relations Social
responsibility Environmental responsibility
Disadvantaged communities
Reduce Re-use Global warming Recycle
WEEK 15 AS 9.3.4 Keyboard skills and function keys Methodology 1. The topic can be introduced in the context of Management information systems:
o The system whereby management gathers, stores, processes and presents information in order to assist managers in decision-making.
o The system can be done manually or electronically (using computers) o Educator can focus the explanation on word processing programmes e.g. micro soft word,
etc. 2. Educator explains the following concepts:
o Computer components/architecture - Hard ware (e.g. keyboard, central processing unit, monitor, etc.)
o Function keys – e.g Esc, Backspace, Insert, etc 3. Educator demonstrates the use of keyboard skills by introducing a QWERTY–keyboard (see
picture below): o developing a simple Word document – e.g. Report o Storing – saving document o Retrieving the document o Editing – e.g highlighting (bold), underline, italics, etc.
4. Educator can use the example of the keyboard below to support explanations and demonstrate in a practical way. (This topic can also be done in collaboration with the CAT/ IT- educator, depending on the school’s context)
5. Consolidate the topic – learners complete the simulation individually or in groups. KEYBOARD:
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Assessment: Informal: Simulation (Individually or in groups) Marking memorandum – use the steps set out below as marking guideline. Instructions: 1. Read the case study below and answer the questions that follow:
CASE STUDY
• You are the newly appointed Human Resource Manager (HRM) for The Caledon Hotel & Spa
• Prepare a report on the computer, in MS Word, about Caledon Hotel & Spa’s social- and environmental responsibility programme by following the steps below:
Step 1: The report must have a heading, body (paragraphs) and a conclusion. Step 2: Save the report/document in a folder named: HR report, name the file Report 1 Step 3: Retrieve the file and edit it as follows: a) Font size Aerial 12 b) Heading bold, italics and underlined. c) Now save the file in the HR report folder and name it Report 2 Step 4: Print a hard copy and submit it for assessment.
Integration: Languages Resources: Textbooks, Websites, Case study Vocabulary:
Management information
systems Computer parts Function keys Word document Storing
Retrieving Editing
WEEK 16 AS 9.3.3: Introducing Retail Business Methodology: 1. Explain a retail business and emphasise the following:
• the buying and selling of trading stock • source documents used in retailing, i.e. cash slip, cash invoice, cheque counterfoil • cost of sales and the link of cost of sales to trading stock • profit mark-up • calculations: selling price, cost price, gross profit = selling price – cost price, mark-up percentages • methods of pricing: fixed mark-up percentage, bar coding, secret codes (secret code
word and/or digital coding), computerised methods (for enrichment) • Sales as the main source of income.
2. Learners must do exercises to consolidate the above information and calculations. Assessment: Informal assessment: 1. Learners will complete a work sheet to consolidate the terms and calculations covered in this
week.
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2. Collect 4 or 5 cash slips from different retail stores. Compare and identify the method(s) of pricing (it can be a group activity) Discuss the advantages and disadvantages of the different cost coding systems. (Note: One or both of these informal assessments may be attempted)
Integration: Languages, Mathematics Resources: Text book, work books, source documents collected, work sheet Vocabulary
Retail business Trading stock Cost of sales Sales Profit mark-up Cost price Selling price Gross profit Bar code Secret code word
WEEK 17 and 18 AS 9.3.6 and AS 9.3.3: Cash transactions of a retail business Introduction: The content covered below should be spread over two weeks. Methodology: 1. Explain the use of different means of payment:
• Cash (notes and coins) • Cheques • Postal orders • Credit cards • Debit cards • Smart cards • Travellers cheques
2. Explain the advantages of cash purchases. 3. Explain the CRJ and CPJ of a retail business. Learners will do exercises to consolidate the
cash journals of a retail business. 4. Explain posting to the general ledger, introducing the accounts related to Trading Stock, Sales,
Cost of Sales. 5. Balance the Trading Stock and Bank accounts. (Note: opening balances should be introduced in ledger accounts) 6. Learners will do exercises to consolidate posting from the journals to various ledger accounts.
(Note: a complete set of general ledger accounts are not required in every exercise. Only focus on the important ledger accounts.)
7. Illustrate the effect of retail transactions on the Accounting Equation (A = O + L). This teaching method can support the understanding of the double entry principle in the general ledger. Revise and draw up a trial balance. Assessment: Informal assessment: 1. Learners will complete at least one exercise that covers the cash journals, posting to the ledger (ALL the applicable accounts) and draw up a trial balance.
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2. Learners will analyse the effect of selling and purchasing of trading stock on the accounting equation on a work sheet. Integration: Languages, Mathematics Resources: Text book, work books, work sheets for the Accounting Equation columns. Vocabulary
Accounting equation Example of a work sheet using the Accounting Equation:
ASSETS OWNER’S EQUITY LIABILITIES NO Effect Reason Effect Reason Effect Reason
Bought goods by cheque from AB Traders, R1 000
+ Trading Stock, R1 000 Trading stock increase 0 0 E.G. 1
- Bank, R1 000 Cash (bank) decrease
Total cash sales as per cash register tape, R500. (cost of sales, R350) + Bank, R500 Cash (bank) increase + 150 profit 0 - Trading Stock, R350 Trading Stock decrease Alternative solution for E.G.2:
+ Bank, R500 Cash increase + 500 Sales (income) 0
E.G. 2
- Trading Stock, R350 Trading stock decrease - 350 Cost of Sales 0
Assessment 1. Educator records all assessment tasks done during term 2: Assessment Task 2 Activity 1 - Case Study on Savings and Investment Assessment Task 2 Activity 2 - Written Report on Public relations strategies Assessment Task 2 Activity 3 - Control Test
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TERM 3 WEEK 21 AS 9.3.6 Introducing Credit Purchases / Transactions Methodology: 1. Explain the concept of credit transactions of a retail business. Highlight the methods of buying on credit and the advantages/disadvantages of credit to the retailer. 2. Explain the credit invoice as a source document for credit sales and credit purchases.
(Note: Learners can complete an invoice in order to understand the basic information recorded on an invoice)
Assessment: Informal assessment: 1. Learners will consider various scenarios (see example below) to debate and list advantages
and disadvantages of credit transactions. Example of Scenarios A: JP Peterson wants to buy a flat screen TV for R20 000 from PJ Electronics. He earns R5 000
per month. PJ Electronics do not sell on credit. B: Cher Queen wants to buy new summer clothes for her children as well as groceries this
weekend. She thinks she might spend R2 500. C: Coco Coffee Shop wants to order ingredients for their bakery from BB Wholesalers each month. They normally spend R3 000 per month, but they also want to be able to return stock
that is not fresh. Possible questions: 1. In each case, consider whether buying on cash or credit is suitable. Explain your opinion in
each case. 2. List advantages and disadvantages for credit transactions to both buyer and seller. Integration: Languages Resources: Text book, work books Vocabulary Credit transactions Credit invoice Credit sales Credit purchases WEEK 22 AS 9.3.3 Introducing Credit Sales
Methodology: 1. Explain debtors and drawing up a debtors journal (DJ) from invoices issued to debtors. Use an
exercise to support the explanation.
2. Learners must do an exercise to complete the DJ.
3. Explain the reason for using control accounts in the general ledger – emphasise the debtors control account.
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4. Post from the DJ to general ledger accounts: Debtors control, Sales, Trading stock, Cost of sales.
Use an exercise to illustrate the posting process. 5. Learners must do an exercise to consolidate the DJ and the posting to the ledger. 6. Explain how payments received from debtors will be processed, i.e. issuing a receipt (source document) and recording this in a CRJ. Explain how the CRJ is to include a Debtors Control column. 7. Post to the general ledger accounts, i.e. crediting the Debtors control account. 8. Posting to Debtors’ accounts in the Debtors Ledger may be introduced for enrichment. Assessment: Informal assessment: 1. Learners will do an exercise to complete the DJ, CRJ and posting to ledger accounts. Integration: Languages, Mathematics Resources: Text book, work books Vocabulary
Debtors Debtors Journal Debtors Control WEEK 23 AS 9.3.3 Introducing Creditors and Creditors Journal (credit purchases) Methodology: 1. Explain creditors and drawing up a creditors journal (CJ) from invoices received from creditors.
Use an exercise to support the explanation. 2. Learner must do an exercise to complete a CJ. 3. Explain posting to the general ledger, introducing the creditors control account. 4. Post from the CJ to general ledger accounts: Creditors control, Trading stock and other various accounts e.g. Stationery, Repairs, etc. Use an exercise to illustrate the posting. 5. Learners must do an exercise to consolidate the CJ and posting to the general ledger. 6. Explain how payments made to creditors will be processed, i.e. issuing a cheque (source document = cheque counterfoil) and recording this in a CPJ. Explain how the CPJ is to include a Creditors Control column. 7. Post to general ledger accounts. i.e. debiting the Creditors control account. 8. Posting to Creditors accounts in the Creditors Ledger may be introduced for enrichment.
Assessment: Informal assessment: 1. Learners will do an exercise to complete the CJ, CPJ and posting to ledger accounts.
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Integration: Languages, Mathematics Resources: Text book, work books Vocabulary
Creditors Creditors journal Creditors Control WEEK 24 AS 9.3.3 Cash and credit transactions of retailers Methodology: 1. Learners must do an exercise to combine the CRJ, CPJ, DJ and CJ and post to the relevant
ledger accounts. Bank, Trading Stock, Debtors Control, Creditors Control should be balanced at the end of a month.
Assessment: Informal assessment: 1. One complete exercise, covering journals and posting to the ledger, should be done in order to draw up a Trial Balance. Integration: Languages, Mathematics Resources: Text book, work books WEEK 25 SWOT analysis Methodology: 1. Revise the following concepts: business ideas, service, tourism business and business
opportunity. 2. Use a case study to explain manufactured goods and SWOT analysis. 3. Use mind mapping, brainstorming and questionnaires (done in grade 7 and 8) to generate
business ideas to manufacture a product or to render a service. 4. Let every learner draw up a SWOT analysis of their own business ideas to confirm the viability of
their business ideas.
SWOT analysis
Weaknesses Internal: negative Business has control over it
Threats External: negative Business has no control over it
Strengths Internal: positive Business has control over it
Opportunities Internal: positive Business has no control over it
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Assessment: Informal assessment Use a case study to consolidate the use of a SWOT analyses. Resources: Textbook, case studies Vocabulary
Strengths Opportunities Threats Weaknesses Internal External
WEEK 26 Advertising Methodology: 1. Explain the following concepts by using examples from the media.
Marketing campaign: This is when an action plan is drawn up to increase the sales of a product. Advertising media: Different methods/ways to give information to the consumer about the product or the business.
2. Discuss advertising media (e.g. posters, flyers, etc.) by using the following table as an
example:
Description Advantages Disadvantages Newspapers Locally, provincial,
national Reach a large target market
Short life span
3. Discuss the following media: television, radio, newspapers, magazines, posters, internet and word of mouth. 4. The learners must select an appropriate advertising medium to promote their own product. 5. Lastly the learners must conduct their own marketing campaign.
o The marketing campaign includes the 4 P’s.
The following criteria are for a good advertisement:
4 P’s
Product
Product
Price
Place
Promotion
AIDA principle
Create Attention Action
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Assessment: Informal assessment Use oral questions to test the knowledge of the learners.
Formal assessment: Task 3: Activity 1 - Poster 1. Use the first period for organising the design of the posters. Discuss the rubric with the
learners. 2. Use the next two periods for the design of these posters.
Suggested Rubric for the Poster: Criteria 0= Not
Achieved 1-2 Partially Achieved
3=Achieved 4=Outstanding/Excellent Achievement
Business Name and contact information
No contact information provided
Inadequate information provided
Relevant name provided but some aspects left out
New creative and innovative Name, Contact information and Address
Attracts attention
Attracts little/no attention
Attracts attention but has shortcomings
Attracts attention
Is colourful and attracts attention
Creates desire for products
Benefits not clearly depicted
Only one benefit depicted / stated
Variety of benefits depicted/stated
A wide variety of benefits depicted/stated
Convinces customers to buy
Reasons to buy are not stated
Only one reason to buy stated
A variety of reasons to buy are stated
A wide variety of reasons to buy are stated
Elicits action from customer
Neither text nor picture is relevant or convincing
Only the text or picture urges the clients to action
The text as well as the picture urges the clients to action
Text and picture convincingly urge the clients into action
Originality and creativity
Not original or interesting and neither text nor picture is relevant
Only the text or the picture is relevant
Good work, but based on existing ideas or copied
Unique piece of work of extremely high quality
Technical Quality
Does not comply with basic requirements. Very little trouble taken
Work has shortcomings
Very good final product
Proof of pride and very hard work, impressive
Integration: Technology
Resources: Textbook, newspaper, magazines
Vocabulary Flyer Target market Word of mouth
Interest Desire
AIDA principle
Create Attention Action
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WEEK 27 Forms of ownership Methodology: 1. Explain all five business ownerships by using a table. 2. You can also use this table to do the comparison between the forms of ownerships.
Sole trader Partnership Close Corporation
Private Company
Public company
Name No requirements
No requirements e.g. Nel & Kie or Nel & sons
Name must end with the letters CC
Name must end with (Edms.) Ltd.
Name must end with Ltd or Limited
Owners 1 owner 2 – 20 partners
1 - 10 members
1 - 50 shareholders
7 – registered shares shareholders
Legal entity No No Yes Yes Yes Liability Unlimited –
owner Partly and jointly liable partners
Limited - members
Limited – shareholders
Limited - shareholders
Continuity Limited Limited Unlimited Unlimited Unlimited Formation Permission
from local municipality
Partnership agreement (orally or in written)
Founding statement
Articles of Association Memorandum of Association
Articles of Association Memorandum of Association Prospectus
Profit sharing
Owner receives all
Profit divided according to agreement
According to % interest
According to type and amount of shares
According to type and amount of shares
Manage Owner Partners Members Directors (at least 1)
Board of directors (at least 2)
Assessment: Informal assessment Draw up a work sheet with different types of questions to assess the knowledge of the forms of ownerships e.g. multiple choice, true and false, match column A and B, etc. Resources: Textbook, work sheet Vocabulary
Limited Board of directors Shares Founding statement WEEK 28 Develop a business plan Methodology: 1. Revise the following concepts:
o Budget: This is a planning instrument on how to spend your money. o Manufacturing business: Make (produce) and sell products to others. e.g. Clover
produce Ice cream, Bokomo produces bread, etc. o Service business: A service business provides a service by selling their skills and time to
others. e.g. hairdressers, garden services, doctors, etc. o Tourism business: A business that promotes tourism in a community.
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2. Explain the following concepts to the learners by using examples. o Business plan: A complete plan of a proposed business. It indicates how the
entrepreneur will execute the opportunity that he/she identified and this plan is used to attract capital.
o Marketing plan: A plan for increasing your market share and identify ways to encourage consumers to buy your product.
o Market research: Using a questionnaire to find out what the market/consumers want. o Advertising plan: Which media you will use to advertise your product or business. o Management plan: A plan that includes how many employees to employ in the business.
Give a description of each position and state the qualifications and experience needed for each position.
o Financial plan: The financial plan indicates how much capital you need and where you will acquire it. An explanation on how you will use the capital (fixed capital and working capital). Includes budget, cash flow statement, income statement and balance sheet.
Assessment: Informal assessment Oral questions for testing knowledge on the business plan.
Resources: Textbook, resource material
Vocabulary Tourism Market share Experience
WEEK 29 Develop a business plan
Methodology:
1. Learners must develop a business plan. They can develop a business plan for one of the following businesses: manufacturing business, service business or tourism business.
Assessment: Formal assessment Task 3: Activity 2 Simulation (Business plan and market day) (You may use the Assessment Task 1 and the rubric in the Planning and Assessment Document for the Senior Phase on page 13 and 14).
Integration: Language
Resources: Textbook, Planning and Assessment Document for the Senior Phase
WEEK 30 Revision
Assessment: Formal Assessment Task 3 Activity 3: Control Test (covers work completed in term 3): 75 – 100 Marks.
Assessment: 1. Educator records all assessment tasks completed during term 3:
Assessment Task 3 Activity 1: Poster
Assessment Task 3 Activity 2: Simulation (Business plan for market day)
Assessment Task 3 Activity 3: Control test
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TERM 4 WEEK 31 TRADE UNIONS Methodology 1. Revise the concept of trade unions 2. Explain the following concepts:
• Strikes: - withholding one’s skills for the benefit of good working conditions (a trade union action)
• Stay aways: - when people refuse to go to work due to dissatisfaction with their working conditions (a trade union action)
• Apartheid era: - an era in our country (South African context) whereby certain groups of people were discriminated against on the basis of race, culture, religion, gender, etc
• South African economy: - an economy made up of local (South African) businesses, local households, local government
• Political transformation: - change within the political arena • Economic transformation: - change within the economic sphere • Social transformation: – change within the social arena e.g. a change of culture due
to technological innovations • Labour issues: - all aspects pertaining to human resources
3. Critically assess how trade union actions (strikes and stay away) during the apartheid era and in general influence the following:
• South African economy:- brought about economic change, example: regardless of one’s race, people performing the same job earn the same salary
• Political transformation: - politics influenced trade unionism • Economic transformation: - due to trade unionism, all South Africans have an equal
economic participation with regards to employment equity (fairness in the work place) and other basic human rights
• Social transformation: - due to trade unions, perceptions about the previously disadvantaged individuals such as blacks, women and disabled people have changed our social make up
• Labour issues: - introduction of bargaining councils, fair labour practices within the workplace - The educator can initiate a discussion/a debate where learners with his or her help (facilitation) debate the above issues
Assessment Formal: Task 4 Activity 1, Form of Assessment: An Investigation The gold mines have been an important source of wealth for South Africa for more than a century. There has always been tension between workers on the mines and the owners and mine bosses. 1. In pairs, research two different strikes:
(a) a strike that took place a long time ago, the 1922 miners’ strike (b) a recent strike – any miners’ strike from 2000 onwards
2. Look at ways in which the two strikes were different and the same. Integration: Languages, Social Sciences Resources: Newspaper, Textbooks, Television news, Internet websites
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Vocabulary:
WEEK 32 AS 9.3.7: Laws affecting basic conditions of employment and non-discrimination
Methodology 1. Educator can introduce the topic by linking with transformation issues dealt with in week 31 2. Learners to research laws affecting basic conditions of employment and non-discrimination in
the work place. 3. Educator explains the following concepts:
o Labour law - legislation regulating conditions of employment, labour relations and the promotion of equality.
o Basic conditions of employment - conditions stipulated by law under the Basic Conditions of Employment Act (e.g. Work hours, minimum wage, leave, etc)
o Non-discrimination – promotion of equal opportunities in the workplace i.e. no discrimination on the basis of race, gender, HIV-status, etc.
o Employment Equity – to eliminate discrimination in the work place 4. Educator briefly explains the main purpose of the following laws:
o Basic Conditions of Employment Act – determines how employees should be treated in the workplace
o Labour Relations Act: in regulating the employer–employee relationship it aims to: • Democratise the workplace • bring about labour peace, social justice, etc.
o Skills Development Act - aims to improve employment opportunities for the previously disadvantaged, rectifying imbalances of the past by improving the levels of investment in education and training
o Employment Equity Act – aims to protect employees and job seekers from unfair discrimination, create equal opportunities, framework for affirmative action
o Occupational Health and Safety Act - to manage the health and safety of workers in the workplace
5. Learners take notes and complete the informal activity. 6. Educator consolidates the topic. Integration: Languages, Social Sciences Assessment Informal: Learners do research on the laws affecting basic conditions of employment and non-discrimination in the workplace focusing on the name of the law/act and its main purpose. Vocabulary Basic Conditions of Employment Act
Labour relations
Labour Relations Act
Skills Development Act
Employment equity
Employment Equity Act
Occupational Health and Safety Act
WEEK 33 AS 9.3.1 Basic Income Statement of a retail business Methodology: 1. Explain and prepare the Income Statement of a retail business by using an exercise,
highlighting gross profit and net profit. (see the correct format below)
Trade unions
Basic Conditions of Employment
Act
Discrimination in the workplace
Bargaining councils
Employment Equity
Labour relations
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2. Learners must do exercises to complete an Income Statement. Assessment: Informal assessment: 1. Learners must complete exercises to consolidate the preparation of the Income Statement. Integration: Languages, Mathematics Resources: Text book, work books WEEK 34 AS 9.3.1 Basic Balance Sheet of a retail business Methodology: 1. Explain and prepare a Balance Sheet of a retail business, by extending the exercise used in no.
1 in week 33 above. 2. Learner must do one exercise to complete a Balance Sheet. (the exercise used in no 2 in week
33 above may be extended) Assessment: Informal assessment: 1. Learners must complete exercises to consolidate the preparation of the Income Statement and Balance Sheet. Integration: Languages, Mathematics Resources: Text book, work books FORMATS FOR FINANCIAL STATEMENTS OF A RETAIL BUSINESS
NAME OF BUSINESS Income Statement for the year ended ‘31
December 20..’
NAME OF BUSINESS Balance Sheet as at ‘31 December 20..’
Sales 20 000 Assets Cost of Sales (12 000) Fixed Assets 230 000Gross Profit 8 000 Land and Buildings 200 000Other Operating Income*: 11 000 Vehicles 15 000 Commission Income 5 000 Equipment 5 000 Rent Income 6 000 Fixed Deposit** 10 000Gross Operating Income 19 000 Operating Expenses*: (14 000) Current Assets 8 000 Salaries and Wages 9 000 Trading Stock 4 000 Water and Electricity 2 000 Debtors Control 1 000 Advertising 3 000 Bank 2 500Operating profit 5 000 Cash Float 500Interest Income 1 000 Profit before Interest Expense 6 000 Total Assets 238 000Interest Expense (500) Net Profit for the year 5 500 Equity and Liabilities
Owner’s Equity 200 000 Capital (see note 1) 200 000
* adapt the list to those given in a particular exercise. ** for enrichment
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Non- Current Liabilities 30 000 Loan** 30 000 Current Liabilities 8 000 Creditors Control 8 000 Total Equity and Liabilities 238 000 NOTE 1: Capital Capital at beginning of the year 196 000 Add Net Profit 5 500 less Drawings (1 500) Capital at the end of the year 200 000
WEEK 35 and 36 AS 9.3.5 Basic analysis of Income Statement and Balance Sheet
Methodology: 1. Identify the groups of people who would be interested in the financial statements (i.e. the owner, creditors, employees, SARS, banks)
2. Explain and calculate the following: o % gross profit on cost of sales o % operating expenses on sales o % net profit on sales o % net profit on capital/equity (also referred to as the return on equity) o solvency ratio o current ratio o acid test ratio
3. Use the calculations above to interpret and comment on the financial statements.
SUGGESTED GUIDE TO EXPLAIN ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS The interested parties (mentioned in methodology no 1 above) may ask different questions that can be answered by analysing and interpreting the financial statements. The table below shows the questions asked, the financial ratios (indicators) and the formulae to calculate the ratios:
Question(s) asked Ratio / Indicator Formula Was the % mark-up set in the pricing policy reached?
% gross profit on cost of sales
Gross Profit x 100 Cost of Sales 1
Is the business operating efficiently?
% operating expenses on sales
Operating Expenses x 100 Sales 1
Is the business operating profitable?
% net profit on sales Net profit x 100 Sales 1
What is the owner earning in return for the amount invested in his business?
% net profit on capital Net profit x 100 Capital (beginning) 1
Can the business settle all its debts and still operates?
solvency ratio
Total Assets : Total Liabilities
current ratio
Current Assets : Current Liabilities Can the business settle its current debts with current assets? (it indicates the liquidity of the business, when compared to the norm/generally accepted ratio)
acid test ratio
(Current assets - Stock) : Current Liabilities
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Assessment: Informal assessment: 1. Learners must complete exercises to consolidate the calculation and interpretation of the listed ratios. Formal Assessment Task 4, Activity 2: Data Response Felix Zola owns Cell Zone that sells cell phones and accessories. The business uses a profit margin of 100%. You are provided with financial indicators from their financial statements for the past two years:
Financial indicators 20.2 20.1 % net profit on capital 21% 18% % operating expenses on sales 25% 20% % net profit on sales 8% 10% % gross profit on cost of sales 80% 100% acid test ratio 1,1 : 1 0,9 : 1 current ratio 1,8 : 1 2,2 : 1
Refer to the information above to answer the following questions. Quote figures and/or show any appropriate calculations: (The suggested memo is included below) 1. Comment on the mark-up policy, as well as the mark-up reached over these two
years. (8)
Cell Zone uses a mark-up of 100%. They did reach 100% in 20.1, but only 80% in 20.2. It has decreased by 20%.
2. Do you think that Cell Zone is managing their operating expenses well? Explain your opinion.
(6)
No The % operating expenses on sales increased by 5% from 20% to 25%
3. Is Cell Zone operating profitable? Name the ratio that will be used to answer this question. Comment on this ratio. Supply one possible reason for the change in this ratio.
(10)
No The % net profit on sales decreased by 2% from 10% to 8% Possible reason (also accept any other reasonable answer): Operating expenses had increased.
4. Can Felix Zola be satisfied with the return on his investment in 20.2? Explain your opinion.
(8)
Yes The % net profit on capital (OR return on investment) increased by 3% from 18% to 21%. 21% is also better than the % interest earned at a bank.
5. Use the acid test ratio and the current ratio to comment on the liquidity of the business.
(10)
The current ratio has decreased from 2,1 : 1 to 1,8 :1 The ratio was above the norm of 2:1 in 20.1, but belowthe norm in 20.2. The acid test ratio increased from 0,9 :1 in 20.1 to 1,1 : 1 In 20.1 it was below the norm of 1:1, but in 20.2 it was above the norm
6. Which ratio will show the ability of Cell Zone to continue after settling all their debts? (The ratio is not necessarily included in the list above.)
(2)
Solvency ratio. 7. Felix is not the only party interested in these financial indicators. Name any three
other parties that might find these financial indicators useful. (6)
Any 3 of: 3 x creditors, employees, SARS, banks (NOT the owner = it was given)
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Integration: Languages, Mathematics Resources: Text book, work books Vocabulary
Current ratio Acid test ratio Solvency ratio