Put your learning to work
Check the story behind the growth
Build Harbour’s accounts, then decide whether its growth is financially convincing. Keep your workings and a short committee judgement in your workbook.
1 Take a first view2 Work and test3 Record your judgement
Case briefing video coming soon
Apply Financial Statements
Read the full narration
You have now built the tools in Financial Statements. The next task is to apply them to the supplied fictional case. Start with the objective and constraints. Record your first decision and the evidence supporting it. Work the numbers using consistent definitions and units. Invite the strongest reasonable challenge. When new information arrives, keep your first record and explain what changes. Finish with a conditional conclusion: what you would do, why, what remains uncertain and what evidence would trigger a review. This is a teaching exercise with fictional information. The quality of your reasoning matters more than whether a simulated outcome later looks favourable.
Rebuild Harbour’s accounts.
All figures £m except per-share data. Harbour is fictional. Historical cases assume a non-financial operating company, no acquisitions, disposals, FX, other reserves, preference/minority claims or non-cash financing movements. The tax and interest amounts are already reflected in net profit and the stated cash bridge; do not deduct them twice.
| Input | Prior / opening | Current / closing |
|---|---|---|
| Revenue | 200 | 240 |
| Operating profit | 34 | 36 |
| Cost of sales | — | 144 |
| Operating expenses, including D&A | — | 60 |
| Depreciation within expenses | — | 6 |
| Net finance cost | — | 4 |
| Income-tax expense | — | 8 |
| Cash | 26 | 30 |
| Receivables | 40 | 48 |
| Inventory | 28 | 32 |
| PP&E | 84 | 90 |
| Trade payables | 32 | 35 |
| Other current liabilities | 15 | 15 |
| Debt, all non-current here | 49 | 50 |
| Equity | 82 | 100 |
| Equipment capex | — | 12 |
| New borrowing / repayment | — | 5 / 4 |
| Cash dividend | — | 6 |
| Ordinary shares, million throughout | 20 | 20 |
Your model
- Build income statement from revenue to EPS.
- Reconcile OCF, investing and financing movements, then closing cash.
- Roll PP&E, debt and equity forward; check A=L+E independently.
- Calculate growth, margins, current ratio, AQA-defined ROCE and gearing.
- Write three observations and three unresolved questions.
Control totals after your attempt
Gross profit96; EBIT36; EBITDA42; PBT32; net profit24; EPS1.20. OCF21; investing−12; financing−5; cash change4; closing30; simple FCF9. Closing PP&E90; debt50; equity100; A=L+E=200. Current ratio2.2; ROCE24%; gearing33.33%.
Peer review
Swap workings. Reproduce one result without asking the author, inspect signs/units and identify one assumption whose change could alter the conclusion. Record a correction openly rather than hide it with a plug.
The financial-quality committee
Write 300–450 words assessing whether Harbour’s 20% revenue growth supports confidence in its financial performance. Use the complete historical dataset in the practice lab and the base/downside forecast in lesson 2.1.8.
- Calculate and interpret growth and at least two margins.
- Reconcile profit, operating cash, capex and closing cash.
- Use one liquidity or financing measure and explain its limitation.
- Compare the forecast cases, identify two missing pieces of evidence and state a conditional judgement.
Original practice rubric · 15 marks
- Evidence and arithmetic (4 marks): Correct calculations, units, source trail and clearly stated assumptions.
- Analysis (4 marks): Explains business mechanisms and connects the statements or valuation drivers.
- Balanced judgement (4 marks): Addresses a credible alternative, weighs limitations and reaches a conditional conclusion.
- Communication and review (3 marks): A clear note with prioritised missing evidence and observable review triggers.
Indicative response after your own attempt
Revenue grows 20% but EBIT only 5.88%; margin falls from 17% to 15%. OCF21 versus profit24 reflects stated timing items; simple FCF9 covers dividend6 historically, with maturities and future capex still needing review. Current ratio2.2 includes receivables/inventory, so it is not a cash guarantee. Base EPS1.41 versus downside0.87 shows sensitivity. A strong note would investigate customer collections, cost mix and capacity before treating growth as proof of improved quality.
This is an On Judgement classroom rubric, not an official AQA mark scheme.