Business – Year 12 Revision Notes

Student: Maxi Course: A-level Business, Year 12 (Units 3.1 and 3.2) Exam board: AQA AS and A-level Business. Your outline's numbering (3.1.1 → 3.3.4) matches the new AQA specification (7138): first taught September 2026, first A-level exams in June 2028.

How you will be examined (A-level 7138):

• Three papers, each 2 hours, 90 marks and 33.3% of the A-level.
  • Paper 1: Unit 3.1 (business, marketing and finance).
  • Paper 2: Unit 3.2 (people and operations); it may draw on 3.1, including calculations.
  • Paper 3: Unit 3.3 (Year 13); it is synoptic.
• Each paper has two case studies, each with five compulsory questions worth 45 marks.
• Quantitative questions:
  • Papers 1 and 2 each include two quantitative questions, worth 9 or 15 marks.
  • Paper 3 has one.
  • You must calculate a figure and then use it in your analysis and judgement.

How to use these notes. They follow your outline exactly: Autumn – 3.1.1, 3.1.2, 3.1.3; Spring – 3.1.4, then 3.2.1; Summer – 3.2.1 (continued), 3.2.2, 3.2.3. Each topic has Key ideas → Glossary → Worked examples / theories → Exam tips → Self-test. A complete formula sheet with worked numbers is in Section 0.2.

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0.1 Command words (AQA 7138)

Command	Marks	Skills	How to answer
Define*	2	AO1	A precise textbook definition. AS only.
Explain*	4	AO1, AO2	Define, then apply to the case. AS only.
Analyse	6	AO1–AO3	One or two developed chains of reasoning ("this means… which leads to… therefore…"), tied to case evidence. No judgement is needed.
Assess	9	AO1–AO4	Arguments for and against a single action or issue, then a judgement saying which is stronger and why.
Evaluate	15	AO1–AO4	Comes in two types (see below). Both need a justified recommendation.

The two types of Evaluate question:

• Type A: you identify two courses of action yourself, evaluate both, and recommend one.
• Type B: you evaluate the two options given and choose between them.

Assessment objectives:

• AO1: knowledge.
• AO2: application to the case.
• AO3: analysis.
• AO4: evaluation.

Structure for a 9-mark "Assess" answer:

1. Argument for: a developed chain of reasoning using case data.
2. Argument against: another developed chain of reasoning using case data.
3. Judgement: which side is stronger, because…. Say what it depends on and which case evidence is decisive.

Structure for a 15-mark "Evaluate" answer (about 22 minutes):

• Option 1: benefits, then drawbacks, each developed and applied. Use a calculation where data are given.
• Option 2: the same treatment.
• Recommendation: choose one option and justify it using the business's objectives, resources, market conditions and risk. Explain why the other option is weaker, and give the key condition ("it depends on…").
• Sophisticated concepts: using a relevant model, theory or ratio not directly asked for is credited at the top level.
  • Models: market mapping, product life cycle, Boston Matrix, network analysis, Hackman, Ansoff, SWOT, stakeholder mapping, Porter, Triple Bottom Line, Carroll, Lewin, Kotter and Schlesinger.
  • Theorists: Taylor, Maslow, Herzberg.
  • Ratios: e.g. ROCE, margins, the acid test, break-even.

Top tips:

• Always use the case. Quote figures, name the business and its products, and use its objectives.
• Show working in every calculation, include units (£, %, days, times), and interpret the answer ("so the firm can cover…").
• Use "which means that…" chains to reach analysis marks.
• Make a judgement that follows from your argument, not a generic "it depends".

0.2 Formula sheet with worked numbers

#	Formula	Worked example
1	Market capitalisation = number of issued shares × current share price	50m shares × £2.40 = £120m
2	Dividend per share = total dividend paid ÷ number of ordinary shares	£6m ÷ 50m = £0.12 = 12p
3	Dividend yield (%) = dividend per share (p) ÷ share price (p) × 100	12 ÷ 240 × 100 = 5%
4	Market share (%) = sales of product/brand/business ÷ total market sales × 100	£45m ÷ £300m × 100 = 15%
5	Market growth (%) = change in market size ÷ original size × 100	(£330m − £300m) ÷ £300m × 100 = 10%
6	PED = % change in quantity demanded ÷ % change in price	−25% ÷ +10% = −2.5 (elastic)
7	YED = % change in quantity demanded ÷ % change in income	+8% ÷ +5% = +1.6 (income elastic)
8	Total variable costs = VC per unit × units	£10 × 4,200 = £42,000
9	Total costs = FC + VC	£45,000 + £42,000 = £87,000
10	Revenue = price × units sold	£25 × 4,200 = £105,000
11	Contribution per unit = price − VC per unit	£25 − £10 = £15
12	Total contribution = contribution per unit × units (or TR − TVC)	£15 × 4,200 = £63,000
13	Break-even output = FC ÷ contribution per unit	£45,000 ÷ £15 = 3,000 units
14	Margin of safety = actual output − break-even output	4,200 − 3,000 = 1,200 units
15	Budget variance = budgeted figure − actual figure	Costs: £30,000 − £27,000 = £3,000 favourable
16	Payables days = payables ÷ cost of sales × 365	£45k ÷ £360k × 365 = 45.6 days
17	Receivables days = receivables ÷ revenue × 365	£50k ÷ £600k × 365 = 30.4 days
18	Current ratio = current assets ÷ current liabilities	£150k ÷ £100k = 1.5
19	Acid test = (current assets − inventory) ÷ current liabilities	(£150k − £60k) ÷ £100k = 0.9
20	Profit = TR − TC (or total contribution − FC)	£63,000 − £45,000 = £18,000
21	Gross profit = revenue − cost of sales	£600k − £360k = £240k
22	Gross profit margin = GP ÷ revenue × 100	£240k ÷ £600k × 100 = 40%
23	Operating profit = GP − operating expenses	£240k − £150k = £90k
24	Operating profit margin = OP ÷ revenue × 100	£90k ÷ £600k × 100 = 15%
25	Profit for the year = OP + profit from other activities − net finance costs − tax	£90k + £0 − £10k − £20k = £60k
26	Profit for the year margin = PFY ÷ revenue × 100	£60k ÷ £600k × 100 = 10%
27	ROCE = operating profit ÷ (total equity + non-current liabilities) × 100	£90k ÷ (£400k + £200k) × 100 = 15%
28	Return on marketing spend = profit from marketing ÷ marketing spend × 100	£60k ÷ £40k × 100 = 150%
29	ROI = profit from investment ÷ cost of investment × 100	£12k ÷ £80k × 100 = 15%
30	Gearing = non-current liabilities ÷ (total equity + NCL) × 100	£200k ÷ £600k × 100 = 33.3%
31	Employee productivity = output ÷ number of employees	24,000 ÷ 40 = 600 units per employee
32	Sales per employee = sales ÷ number of employees	£600k ÷ 40 = £15,000
33	Employee turnover = staff leaving ÷ staff employed × 100	6 ÷ 40 × 100 = 15%
34	Employee costs as % of revenue = employee costs ÷ revenue × 100	£180k ÷ £600k × 100 = 30%
35	Unit (average) cost = total costs ÷ units of output	£87,000 ÷ 4,200 = £20.71
36	Capacity utilisation = actual output ÷ maximum possible output × 100	4,200 ÷ 6,000 × 100 = 70%
37	Inventory turnover = cost of sales ÷ average inventories	£360k ÷ £60k = 6 times a year
38	Float = LFT − duration − EST	9 − 2 − 3 = 4 days (see Topic 47)

Other number skills you need:

• Percentage change = (new − old) ÷ old × 100.
• Index number = (value ÷ base-year value) × 100.
  • Example: sales of £80k in 2023 (base year = 100) and £92k in 2025 give an index of 92 ÷ 80 × 100 = 115, i.e. 15% growth since the base year.

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