Liquidity | AQA A Level Business Exam Questions & Answers 2026 [PDF]

1

6 marks

Source A: MJ Gleeson plc
MJ Gleeson plc builds houses. It is a public limited company listed on the London Stock Exchange and it works in two quite different ways. Gleeson Homes builds and sells houses, mainly in the North of England and the Midlands. Gleeson Land buys options on farmland, obtains planning permission and sells the land on to other housebuilders.
What makes Gleeson unusual is who it sells to. It builds the lowest-priced new homes in Britain and says its average selling price is 34% lower than the average new build price in the regions where it works. In the year to 30 June 2025, 78% of the homes it sold were affordable to a couple both earning the National Living Wage. Many of its buyers are first-time buyers who would otherwise be renting.
The year was a difficult one. Group revenue rose 5.9% to £365.8 million and the company sold 1 793 homes, only 21 more than the year before. The average selling price rose 4.3% to £193 600, but almost all of that came from building a different mix of houses rather than from charging more for the same house: underlying price growth was just 0.6%.
Costs went the other way. The gross margin at Gleeson Homes fell from 24.1% to 20.7%, and its operating profit fell 26.4% to £22.3 million. Gleeson Land had a much better year, completing seven land sales and lifting its operating profit from £2.2 million to £7.0 million, but it is far too small to make up the difference. Group profit before tax fell 17.3% to £20.5 million.
The company built from fewer places. Active build sites fell from 79 to 68, while the land pipeline grew slightly to 19 638 plots. Gleeson holds a medium-term target of building 3 000 homes a year, which is well above the 1 793 it managed this year.
Money left the business. Gleeson began the year with net cash of £12.9 million and ended it with net borrowings of £0.8 million, having held its dividend at 11.0p a share even though earnings per share fell from 33.13p to 27.11p.
Source: MJ Gleeson plc audited results for the year ended 30 June 2025, 16 September 2025

Appendix A: MJ Gleeson plc selected results
Source: MJ Gleeson plc

MJ Gleeson plc began the year with net cash of £12.9 million and ended it with net borrowings of £0.8 million.

Analyse one way in which this change might affect MJ Gleeson plc's ability to buy land for future sites.

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2

6 marks

Source A: Ridgeway Signs
Tomasz Nowak trades as Ridgeway Signs. He is a sole trader, which means the business is not separate from him in law: he owns everything it owns and he is personally responsible for everything it owes. He has no employees and works from a rented unit on a small industrial estate, with a van.
He designs, prints and fits signs for local businesses: shop fascias, vehicle graphics, banners, menu boards and exhibition displays. Almost all of his customers are other businesses within about twenty miles. Every job is quoted separately, and he wins roughly one quote in three.
Last year Ridgeway Signs took £85 000. Materials cost about 30p in every pound of work Tomasz does himself, so he keeps about 70p. Rent on the unit, the van, insurance and design software cost £21 000 a year whatever he sells.
The business has a shape to it. Appendix B shows sales month by month. October and November are his best months, because retailers refit before Christmas, and January and February are his worst.
There is one piece of work he cannot do. Large-format printing, such as vehicle wraps and big banners, needs a machine he does not own, so he sends those jobs to a trade printer in another town. Last year that work was worth £22 000 of his sales, but the trade printer takes most of it: Tomasz keeps only about 20p in the pound. He also turns away large jobs when the trade printer is busy.
A wide-format printer costs £24 000. Tomasz has £6 200 in the business account. Appendix C sets out what his accountant thinks would happen if he bought one.

Appendix A: Ridgeway Signs, summary of last year
Source: Analyst

Appendix B: Ridgeway Signs monthly sales
Source: Analyst

Ridgeway Signs has fixed costs of £21 000 a year and £6 200 in the business account.

Analyse one way in which holding this amount of cash might affect Ridgeway Signs' ability to pay its bills through January and February.

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3

6 marks

Source B: Brightpath Learning Ltd
Brightpath Learning Ltd is an online tutoring company set up six years ago by two former teachers, Aisha Rahman and Tom Petridis, who are its only shareholders and directors. It employs 31 people at its office in Leeds and works with about 400 self-employed tutors.
It sells two quite different things.
Live tutoring. A student books one-to-one lessons online with a subject specialist. A lesson costs the parent £38. Brightpath pays the tutor £26 and keeps £12. This is the larger part of the business and the part parents ask for by name, but it can only grow as fast as Brightpath can recruit and check tutors, and a tutor can only teach one student at a time.
The practice platform. A subscription costs £9 a month and gives a student unlimited access to Brightpath's own question banks, marked practice papers and progress tracking. It costs almost nothing to serve one more subscriber, because the material is already written. Fewer parents ask for it, because it is harder to explain than a lesson with a teacher.
Last year Brightpath took £7.4 million: £6.5 million from tutoring and £0.9 million from subscriptions. Fixed costs, covering the office, the 31 staff, the software and the marketing, came to £1.9 million.
The business is highly seasonal. Appendix E shows lessons booked month by month: demand builds through the autumn, rises sharply after Christmas and peaks in April, then collapses once exams finish. Aisha and Tom have to pay the office and the staff through June, July and August whatever happens.
They now have to decide where to put next year's money. Appendix F sets out the two options.

Appendix E: Brightpath Learning Ltd lessons booked by month
Source: Analyst

Appendix E shows that Brightpath Learning Ltd's lessons fall from 30 000 in April to 3 000 in July.

Analyse one way in which this pattern might affect the amount of cash Brightpath Learning Ltd needs to hold.

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4

6 marks

Source B: Galliford Try Holdings plc
Galliford Try Holdings plc builds things: schools, hospitals, water treatment works, roads and defence sites. It is a public limited company listed in London and it works almost entirely in the United Kingdom, mostly for public sector clients and regulated utilities. It does not build houses for sale.
Construction is a low-margin business and Galliford Try Holdings plc says so. In the year to 30 June 2025 revenue was £1.9 billion, 6% up on the year before, and the divisional adjusted operating margin was 3.0%. The company had set itself a target of 3.0% and reached it a year earlier than it had planned.
On a job of this size almost nothing is built by Galliford Try Holdings plc's own employees. The work is done by subcontractors: groundworkers, electricians, roofers, most of them small firms. In construction the usual way to hold on to cash is to pay those firms slowly, and the industry has a long record of doing exactly that. In the six months to 31 December 2025 Galliford Try Holdings plc paid its supply chain in an average of 29 days, and it publishes how quickly it pays.
It also holds a great deal of cash. The figure it reports is the average of its cash balance at the end of each month, which was £179 million, up from £155 million. It reports the average rather than the year-end figure because a construction company's cash moves a long way from month to month, and the balance on any single day says very little.
Source: information sourced from Galliford Try Holdings plc results for the year ended 30 June 2025 and the six months ended 31 December 2025

Appendix D: Galliford Try Holdings plc selected results
Source: Galliford Try Holdings plc

Appendix E: Galliford Try Holdings plc cash at each month end, analyst estimates
Source: Analyst

Appendix E shows that Galliford Try Holdings plc's cash balance was £205 million at the end of its financial year, while its average month-end cash for the year was £179 million.

Analyse one way in which looking only at the year-end figure might affect how well a reader understands the cash Galliford Try Holdings plc has available.

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6

6 marks

Source A: Kids Planet Day Nurseries Ltd
Kids Planet Day Nurseries Limited runs day nurseries for children below school age. Clare Roberts set the business up in Cheshire in 2008 and has been a director since the August of that year. Its registered activity is pre-primary education and its head office is still in Lymm, near Warrington.
The company has grown mainly by buying other nurseries rather than by building new ones. It is now the parent of a group of 152 companies, most of them businesses it has taken over, and it holds 69 properties, 28 of which it owns outright and 41 of which it leases. It employs around 5 000 people. There is a single shareholder.
Growth has been fast. Turnover rose by 42.3% in the year to 31 March 2025, reaching £204.56 million, and cash at the bank more than doubled. But buying nurseries has been paid for largely by borrowing. The group's total liabilities are now slightly larger than its total assets, which means its net assets are negative. That figure is moving in the right direction: net assets improved from minus £16.04 million to minus £3.50 million over the year.
The number of children available to fill nursery places is not fixed. Live births in England and Wales have fallen in three of the past four years, from 624 828 in 2021 to 585 396 in 2025. Appendix B shows the trend. The government also pays for a set number of childcare hours for many families, so a nursery's income comes partly from parents and partly from the state.
The directors must now decide whether to carry on buying nurseries.
Source: information sourced from Companies House and the Office for National Statistics, 2026

Appendix A: Kids Planet Day Nurseries Ltd selected financial data
Source: Companies House

Kids Planet Day Nurseries Ltd's cash at the bank more than doubled during the year to 31 March 2025, while its net assets remained negative.

Analyse one way in which holding more cash might affect Kids Planet Day Nurseries Ltd's ability to keep buying other nurseries.

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7

6 marks

Source A: The Gym Group plc
The Gym Group plc runs low cost gyms. It opened its first in 2008 and is now a public limited company with shares traded on the London Stock Exchange. It describes itself as a leading low cost gym operator and its offer as high value, low cost. Members pay by the month, there is no long contract to sign, and the gyms are open 24 hours a day.
The company calls its approach a labour light business model. Gyms are largely self-service, so a site can run with a small team, and the savings go into the price rather than into staff on the front desk. In the six months to 30 June 2026 The Gym Group had an average of one million members, up 5% on the same period a year earlier, and average revenue per member per month rose 5%.
Growth comes from two places. The company opens new gyms, and it improves the ones it already has. Four new sites opened in the first half of 2026, with eleven more being built, and it expects to open at least 20 during the year as part of a plan to open around 75 over three years, paid for out of its own cash. It also refurbishes older gyms to a newer design. Three were refurbished in the first half of 2026 and eighteen more were planned for the second half. Gyms refurbished during 2025 went on to win 10% more members than before.
The business is not short of demand, but it is carrying a lot of debt. At the end of 2025 its total liabilities were £474.2 million against total assets of £615.9 million, and it held only £3 million in cash. The company says its aim is a 30% return on the money invested in its mature gyms, and it is buying back some of its own shares.
Appendix C shows where The Gym Group sits against other kinds of gym.
Source: The Gym Group plc interim results, 9 September 2026, and Companies House

Appendix B: The Gym Group plc financial position at 31 December 2025
Source: Companies House

At 31 December 2025 The Gym Group plc held £3 million in cash, against total liabilities of £474.2 million.

Analyse one way in which holding this amount of cash might affect The Gym Group plc's plan to open around 75 gyms over three years out of its own cash.

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1

9 marks

Source A: Gymshark Ltd
Ben Francis was 19 when he asked his parents if he could use their garage to start making gym clothes he had designed. Whilst studying business at university, Ben teamed up with a school friend, and the gymwear business Gymshark Ltd was born.
Ben used his £5-an-hour wage at Pizza Hut and £1000 savings to invest in equipment like a sewing machine. Ben taught himself to sew and went to bodybuilding events to raise brand awareness. In 2012, Ben dropped out of university to focus on the business full-time.
The Gymshark Ltd brand has become a hit with younger gym goers and is doing well in a highly competitive market. Its competitors include Nike, Adidas and Puma. Instead of using traditional advertising or selling in high street shops, Gymshark Ltd has grown by having athletes and social media 'influencers' wear its clothes on platforms like Instagram, TikTok, and Facebook. Ben is also well known and still shares his own fitness videos online to promote the brand. The company now has 18 million followers on social media.
Gymshark Ltd is a private limited company. In 2021, it raised £200 million by selling shares to a company called General Atlantic. This made Gymshark Ltd one of relatively few British businesses valued at over $1 billion. Ben still owns a 70% stake in the company and has a clear vision of how he wants the business to develop. General Atlantic owns just over 20%. Managers at Gymshark Ltd own 10%. The funds were raised with the aim of expanding the business in North America, where Gymshark Ltd already makes a large part of its sales, and to grow the business rapidly in Asia. Ben has ambitious plans and wants to make the Gymshark Ltd brand the UK equivalent of Nike. The Nike brand was worth $31 billion in 2023 globally; market research suggests that 43% of people who buy Nike sportswear would do so again.
In October 2022, Gymshark Ltd made a significant investment and opened its first physical store on Regent Street in London.
Source: information sourced from Gymshark, 2024

Appendix A: Extracts from Gymshark Group Ltd's statement of financial position as at July 2024 (£000)
Source: Companies House

Appendix B: UK clothing industry financial information
Industry average current ratio = 1.4
Source: Analyst

Assess whether Gymshark Ltd's current ratio indicates that the business was in a strong financial position in 2024.

Calculate the current ratio for Gymshark Ltd in 2024 to support your answer.

Give your answer to two decimal places.

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2

9 marks

Source B: Paper Lane Ltd
Paper Lane Ltd sells stationery, cards and gifts from two small shops in market towns about 15 miles apart. Nina Okafor and Rhys Pritchard opened the first shop nine years ago and set the business up as a private limited company, with the two of them as the only directors and shareholders. They now employ nine other people, most of them part time.
The shops sell notebooks, pens, wrapping paper, cards and small gifts. Customers come in to browse, and a large share of what they buy was not on a list when they walked through the door. Nina and Rhys buy most of their inventory from small makers and from two wholesalers, and they order the Christmas range in August to get an 8% early order discount.
The business makes most of its profit in six weeks. December takes more money than August, September and October put together. That pattern is the heart of Paper Lane's problem. The inventory for Christmas is paid for in the autumn, months before it is sold, so the money goes out long before it comes back.
Sales have been steady and the shops are busy. Even so, cash at the bank fell from £19 000 to £2 000 during the year to 31 January 2026, and at its lowest point in the autumn the company was £22 000 into its overdraft. The overdraft limit is £25 000. Appendix D sets out the company's financial position and Appendix E shows what Nina and Rhys forecast will happen to the cash balance over the coming year.
They have been talking about opening a third shop. Their accountant has told them to sort the cash out first. They are also arguing about whether to ask their customers what they actually want, or to trust what nine years behind the counter has taught them.

Appendix D: Paper Lane Ltd summarised statement of financial position
Source: Analyst

Assess whether Paper Lane Ltd's current ratio indicates that the business was in a strong financial position at 31 January 2026.

Calculate the current ratio for Paper Lane Ltd at 31 January 2026 to support your answer.

Give your answer to two decimal places.

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5

9 marks

Source B: Foxhall Creamery Ltd
Foxhall Creamery Ltd makes hard cheese on the Shropshire border. It is a private limited company owned in equal shares by Kate Foxhall, who is 61, and Owen Ridd, who is 58, and it employs 48 people. Revenue last year was £6 800 000, sold to farm shops, delicatessens and independent grocers, none of whom takes more than 4% of output.
The cheese has to sit. The youngest thing Foxhall Creamery Ltd sells has been in the store for nine months, and its best-known cheese comes out at fourteen. Every wheel in the store is money already spent and not yet earned, and there are two rooms of them.
The accounts look reassuring. At the year end the company held £1 240 000 of inventory, was owed £680 000 by customers and had £410 000 in the bank, against £520 000 owed to suppliers, £118 000 in VAT and PAYE, and £194 000 of the bank loan falling due within the year. The loan stands at £1 460 000 in total, and the financial objective for this year is to reduce it by £200 000.
Foxhall Creamery Ltd values the cheese in its store at what the milk, the labour and the power have cost. A wheel that has been maturing for thirteen months appears in the accounts at the same figure as it did on the day it was made, although the price it will fetch has roughly doubled in the meantime.
The company needs a third maturing store, which will cost £900 000. It can pay for it out of the bank balance and this year's retained profit, or it can borrow again.
There is a larger question behind that one. Kate Foxhall wants to retire within five years. A cheese wholesaler has offered £4 900 000 for the company. The alternative the two of them have been reading about is an employee ownership trust, which would buy the business on behalf of the 48 staff and pay Kate Foxhall and Owen Ridd out of future profits over about seven years.

Appendix D: Foxhall Creamery Ltd, current assets and current liabilities
Source: Analyst

Appendix E: What Foxhall Creamery Ltd's current assets are made of
Source: Analyst

Assess whether Foxhall Creamery Ltd is holding too much in current assets.

Calculate Foxhall Creamery Ltd's current ratio to support your answer.

Give your answer to two decimal places.

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3

15 marks

Source B: Aldergate Landscapes Ltd
Aldergate Landscapes Ltd designs and builds gardens across Cheshire and north Staffordshire. It is a private limited company owned by Joss Aldergate and his wife Ruth, and it employs 19 people alongside regular subcontractors for stonework and electrics.
Most of the work is for private clients having a whole garden rebuilt, at an average of £14 200 a garden. The rest is for two housing developers who want the gardens finished before a show home opens. Last year the company built 188 gardens for revenue of £2 669 600. Materials and subcontractors cost £9 800 a garden. Everything else, meaning the yard, the vans, the permanent staff, the designer and the office, cost £680 000.
The work does not arrive evenly. Appendix E shows what comes in each month, and the three months from December to February brought in £214 000 between them, against fixed costs of about £170 000 for the same period.
To manage this, Aldergate Landscapes Ltd asks private clients for a 50% deposit when the design is signed off. The deposit is spent almost immediately, though not usually on that client's garden: it pays for materials on the job already running.
At the year end the company was owed £312 000 by clients and developers, held £186 000 of gardens that were half built and not yet invoiced, and had £24 000 in the bank. Against that it owed £268 000 to suppliers and subcontractors, £71 000 in VAT and PAYE, and was £46 000 into its overdraft.

Appendix D: Aldergate Landscapes Ltd, summary of last year
Source: Analyst

Appendix E: Aldergate Landscapes Ltd, revenue month by month
Source: Analyst

Appendix F: Data for two ways through the winter
Source: Analyst

Appendix F shows two ways in which Aldergate Landscapes Ltd could get through the winter.

Evaluate whether Aldergate Landscapes Ltd should raise its deposit to 70% or arrange a £120 000 overdraft facility.

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Liquidity (AQA A Level Business): Exam Questions