Business Studies · May / June 2017 · Paper 12 · Question 2

LWM makes car tyres in 15 different sizes using batch production. Last year LWM sold 60 million tyres including 40 million tyres of its best-selling size. The Finance Director has been looking at some financial data as shown in Table 1. She said: ‘Liquidity is important. I need to do some ratio analysis to measure business performance. In the previous year our Return on Capital Employed was 33%.’ The directors are worried about increased competition but they cannot decide on the best way for LWM to respond. Table 1: Extract of financial data for 2016 ($m) Revenue 3000 Profit 1000 Non-current liabilities 2000 Capital employed 4000

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