Business Finance 2018 July Knec Past Paper

SECTION A (32 marks)
Answer ALL questions in this section.
Calculate the Economic Order Quantity. (3 marks)
3. Outline four advantages of ordinary shares as a source of business finance. (4 marks)
Differentiate between leverage ratios and turnover ratios (4 marks)Calculate the amount in the account at the end of (lie 6 years, (.3 marks)
The current ratio of a company is given as 233:1.
Interpret the ratio. (2 marks)
John intends to save ksh 50,000 at the end of each year for 6 years, in a bank account which pays compound interest at the rate of 10% per annum.
Bingwa Limited uses material Tx in its production process. The annual demand of the material is 160.000 units. The annual holding cost is ksh 250 per unit per annum and the cost of placing an order is ksh 500.
Highlight three ways in which non banking financial institutions are important in an economy.(3 marks)
Peter expects to receive ksh 1,600,000 as retirement benefits at the end of 4 years. Calculate the present value of the amount, at a discount rate of 14% per annum. (3 marks;
Outline three limitations of the Pay Rack Period as a method of investment appraisal. (3 marks)
Highlight three ways tn which Business Finance is important to an organisation. (3 marks)
Outline four ways in which cost of capital is important in business decision making.
Explain five factors that may affect the efficiency of savings and credit cooperative societies in Kenya.


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